The Blue Chip Special?
Is it time for a buying spree? JD has an excellent post that tackles this and other timely investment questions. Everyone is asking the same thing: what should I do?
His conclusion is spot on:
I believe that for the average long-term investor, the best course of action right now is to make regular scheduled purchases of low-cost diversified index funds. That’s what I’ve done, and that’s what I intend to keep doing.
He makes a number of other great points:
- Cash is king (ie, having the flexibility to take advantage of times like this; see: Warren Buffet)
- Education is critical (I agree)
- Diversification should be core to any investment strategy
Brett Arends at the WSJ has been on this bandwagon for a while. His advice? Simple, really.
Buy.
For anyone with spare cash, this is like shooting fish in a barrel.
This is generally excellent advice if you’ve already prepared for this scenario; if you don’t have the cash now, what could be the best deals of the century are going to pass you by.
This touches upon one of the core principles of personal finance and business alike: saving today to take advantage of opportunities later. In the same way that we, as individuals, save today to retire at unknown date, Microsoft uses their vast cash reserves for potential acquisitions and stock buy-backs. It’s a philosophy that drives much of what I do in business - positioning myself today to best take advantage of unknown opportunities later.
So are Brett & JD’s points prescriptive or educational? If you’re well positioned, with the liquidity and time-frame to invest, I’d say the former - it’s advice I would love to follow. For the rest of us? An excellent reminder of where we should aim to be, both in good times and bad.
