The overseas markets are getting hammered yet again tonight and the Globex S&P 500 futures are down a whopping 62 points, which translates into over 500 points on the Dow.
If we had not an idea that these prices had a possibility of being reached then we might be worried, even panicked.
However, times like these offer points of purchasing good quality equity issues that have been battered down to bargain prices. With only a 40% current equity exposure we are in the very enviable position of taking off the hands of the panic sellers these quality equity issues at a fraction of their intrinsic values.
While the majority of market players have been lightening their equity loads the whole way down, we have been in a very good position of mostly cash and hedged for 60-70% of the decline.
The question arises as to whether or not we removed our bearish hedge too soon and to that I certainly cannot answer anything but yes we did. However, by sidestepping 70% of declining prices and then only going back into equities by 40% we are in a very good position to capitalize on these current market imbalances.
Those who choose to unload their stocks at this point in time will in all likelihood be doing so at the bottom as investors have been doing since the start of openly traded markets. These mistakes get repeated over and over and it is up to us to take full advantage of such situations.
So if you are one of the many who has held fast to your 100% equity exposure through this entire decline please don't compound the problem by unloading stocks right at a bottom.
Instead, embrace this as an opportunity to perhaps shift some of your positions into stocks that will recover more quickly when the inevitable low is put into place and stock begin their long term rise yet again.
Know that these times of turbulance in the financial markets give birth to a renewed upward bias in stock prices and without these normal periods of declining prices coupled with panic and the world coming to an end, the markets would be sure to cause long term pain on most investors.
THE TIME TO BUY IS WHEN THEIR IS BLOOD ON THE STREETS AND YOU FEEL LIKE YOU WANT TO PUKE!
I realize that is not a very pretty way of looking at things and I am sure there was a more diplomatic way of phrasing this idea, but it has always been the blunt and coarse nature of this saying that has kept it in my mind always.
So, enough of the lecture already.
The bottom line is EMBRACE THIS DECLINE AS OPPORTUNITY AND NOT A CURSE.