Buying on the dip . . .
I've been watching the markets over the summer as the broader indices went up and down. The economic news has been mixed, it's still not clear whether we're going into another recession (probably), or we're about to embark on a strong bull market that will drive all stock prices much higher.
I personally think that we have at least 6 - 12 months before the economy really starts to pick up; there are too many foreclosed houses and other houses on the market, plus banks are not doing well:
Here's a link to one analysts' pov on banks:
He called the last crisis (2008), and speaks with some authority - he worked on Wall Street, but more importantly he worked for the Fed and knows how to assess banks.
So I'm not counting on a recovery anytime soon, at least for a year or so, but I am prepared to buy on the occasional dips, such as this week.
- CVX (Chevron)
- AAPL (Apple)
- DNR (Denbury Resources)
- GLW (Corning)
- ZIP (Zipcar)
- EPD (Enterprise Products Partners)
I've been watching CVX, GLW and ZIP for awhile; these are my first positions. For AAPL, DNR and EPD, these add to my holdings. I didn't think I would see $400 again for AAPL so I had to move quickly on that purchase. EPD and DNR were undervalued, and although they could go down in the short-term, they will rebound quickly at the first sign of a recovery.
I think there will be another big dip before the market takes off again, but I'm not entirely sure. There will probably be a lot of volatility over the next few months due to the financial crisis in Europe, and I think the US recovery is still at least a few months if not a year away.
But if the stock market doesn't dip again, this was a good opportunity. If it does dip, I will buy more again. Either way, longer term, I think within a year, we will see tremendous growth as the glut of empty houses and foreclosings winds down. New construction will pick up again, that will trigger new job opportunities, which brings more spending, which leads to better results in various sectors in the economy, which drives people to buy new houses . . . I can foresee significant growth again, but not for at least 6 months to a year.
Then we will see stocks go up significantly. At least until the next "bubble" pops . . .