The Stock Market Decline – How to Make Money in a Volatile Market
"Be fearful when others are greedy, and be greedy when others are fearful." – Warren Buffet
If one heeds the words of wisdom from the richest man in the United States, now is the perfect time to begin buying stock. Are people fearful? When the Dow Jones average drops over 18% in one week (October 6 to October 10) investors start to sell based on emotion and not common sense.
Whenever there is a massive sell-off in the market one will see the smart investor beginning to gobble up as many of these undervalued shares as possible. So where are the bargains? Energy and utility stocks have taken a big hit during this current economic crisis. Why? People are fearful.
There is absolutely no reason energy and utility stocks should be undervalued. Sure, people are being a tad more conservative, but turning down the heat a couple of degrees is a far cry from turning off all appliances.
If there is a neighborhood in the country that has suddenly started to live off candle light, it certainly has not hit the headlines. Same for water. Has anyone heard of towns cutting their lines and ordering their citizens to drill their own wells?
Energy and utility stocks are always a safe bet. People need their services and without we suddenly start to see them revert back to a 19th century style of life, they will continue to watch 'Dancing With the Stars' and check their email.
Based on all of the above it may be time to get greedy.