From the beginning of my investment career I have always thought that if you weren’t in stock with all your money then you were probably missing out on some returns. That was especially true as I watched the dot com era and then the latest run up in stock prices. While I did keep most of my investments in index funds, I have always had a few stocks in my overall portfolio. Being "all in" in the stock market just always seemed like the right approach.
A couple years ago I was having a conversation with a friend of mine. He is very investment savvy and has been investing almost as long as I’ve been alive. I call him my personal Warren Buffet because he is very much a "value investor". He’s given me more than a few good tips over the years but more importantly he has helped me change my thinking on investing. Until I met him I was guilty of being a follower and trying to chase the latest hot stocks or segments of the market. He has been anticipating a significant buying opportunity in the market for at least the last 3 years. He believes that a good buying opportunity might come around every 8 to 10 years and with all the hype over the last few years, he felt it was about time. He sure was right.
I hadn’t talked to him for a couple months when I called him late last week. I wanted to get his take on the recent market turmoil and see what he was doing. I can’t say I was surprised to hear the pleasure in his voice as he described some of the stocks that were very much on sale. He had been buying all week and I’m sure that buying continued this week. I have no doubt that he’ll do well as the market bumps around.
The number one thing that I have thanked him for, was giving me the advice to keep a percentage of my investments in a cash account (like a money market acct etc). Because I listened to his advice a couple years ago I’m finding myself in the position to buy a few investments at prices I wouldn’t have imagined even a few months ago. My only conflict is when I think the prices will near their bottom.