OPINION

Doh! Did You Just Make the Most Common Mistake in the Market?

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

On Sept. 30, 2011, Townhall Finance published my article Fat Lady with Big Bottom Sings in Stock Market.

In that article I said that we’d reached a bottom in the stock market and that the next move was up.  

There was exactly ONE more down day- the very next day- and then the stock market exploded with the Dow Jones Industrial Average climbing from 10,913 on Sept. 30 to 12,208 on Oct. 27.  

That’s a gain of 11.87%. (I warned investors about previous market bottoms this year, too.)

Were you in the market?  Did you add to your mutual funds?  Did you buy stocks?  Did you tell everybody that the sky is falling, because you were too scared to invest, and you wanted them to join your pity party rather than make a bold move that went against your grain?

If you invested during the August doldrums, good for you!  So did I!

If you didn't, that's a 12 percent gain you can never get back. And let's face it, if you weren't interested in making money in the market you wouldn't have read this far.

We know that the market never goes straight up.  It can be erratic, or bounce around in predictable trading ranges, exactly as individual stocks do.  And the beauty of the market is that sometimes individual stocks are going up while market averages are going down, and vice versa; so there’s always a good growth stock to buy, no matter what the Dow is doing.

Here are some of the stocks on which I currently have buy orders, or alerts.  (I can’t put in buy orders on all of them, because I don’t have enough money in my account, but my investment firm, Morgan Stanley, will text me when stocks reach certain prices that I’ve keyed in.)

Adobe (ADBE)  $24.50

Agilent (A)  $32.00

Avago (AVGO)  $32.00

Ebay (EBAY)  $28.50

Fed-Ex (FDX)  $75.00

Google (GOOG)  $545.00

Harley-Davidson (HOG)  $36.25

Intel  (INTC)  $23.00

Kroger (KR)  $22.40

McDonald’s (MCD)  $85.00

Merck (MRK)  $33.00

Microsoft (MSFT)  $26.00

Target (TGT)  $53.00

Verizon  (VZ)  $35.50

Some of these I’ll buy to trade, some for growth, and some for growth & income.  I’ll miss buying many of these because my price will be too low.  So what?  I’ll buy others as their prices dip, and it won’t matter whether the Dow Jones Industrial Average is very high or very low, because I will have gotten a very fair price on a stock like Intel or McDonald’s.

And my buy orders will sit in the computer, while the Dow bounces all over the place.  The number on the Dow is just a number, a little fact which is far less important in my stock decisions than earnings growth, PE, cash flow, dividend, trading range, beta or debt ratios.  If I’m buying mutual funds, I’ll buy low when the corresponding index is low (e.g. S&P 500, NASDAQ composite).  But I usually buy stocks.  And there’s always something attractive to buy.

I’ll continue to write about growth opportunities through stocks.  And I’ll pay attention to market averages, because they’re interesting facts, and I’m a little bit like Rainman.  But I’ll never head for the hills.  I’ll either walk or run towards growth opportunities, no matter where I find them.  I hope I don’t pass you running in the opposite direction!

Readers should consult their investment and tax advisors to determine suitability, risk and taxation.

Crista Huff, Goodfellow, LLC