Q&A in this period of market turbulence

Markets have brought worries to most investors since summer 2007. We « invest » money to make a profit, not to lose it. We are intelligent people, yet for most of us, our patience has its limits.

Should I sell everything until the economy gets better?

Based on the last 11 economic recessions*, the stock market has started to climb back on average about 6 months before the end of the recession.

The stock market always moves with regards to the investors' prospects for the economy, not after-the-fact. If most investors expect the situation to get better in "x" number of months, they will start buying shares even if there are still a lot of bad news in the media. Their goal: profit from the "boom" that usually follows the "bust".

If you wait for most of the bad news to be dissipated, it is possible you will miss the ride.

What do I have to lose?

Still talking about the same 11 recessions*, the stock market has increased on average by 27% before those recessions were finished. Some expansions have given better results than others, but admittedly a 27% average is impressive.

If you wait for the economy to start functioning normally again, you risk missing part or all the expansion which can take place rapidly, even if there are still a lot of bad news in the media. Nobody likes to leave a 27%-yield on the table…

What are institutional investors doing now-a-days?

In its latest conference call, the management company Brandes indicated that it had recently beaten a record in terms of new purchases in its funds from pension funds and institutional investors.

Also in the news, the legendary Warren Buffen has bought millions of shares of US companies in the financial and consumptions sectors since last September. It is said that he has lost up to 25% of his wealth in the liquidity crisis. What is he doing these days? Buying more stocks...

What should I do?

Well, what would you do if your favorite store had a huge sale with rebates up to 60% and you didn't know how long the sale would last?

In my opinion, it seems like perfect timing to increase my savings, find money lying around in bank accounts or at ING and make a few purchases. Another possibility would be to set-up a system where you make moderate investments every month or quarter in order to profit from a lower average cost in the market.

Whichever approach you choose, at least you will not miss out on the next boom.

Contact me right away and it will be my pleasure to give you more tips on how to profit on opportunities.

Best regards,




*Statistics drawn from the Business News Network (BNN)