Tuesday, February 9, 2016

5 Reasons Why This Choppy Market Is Perfect For Beginning Investors

I'm back!  Where did I go?  Well, I was sick for about two weeks.  It's hard to stay healthy when close to 200 kids try to get you sick each day....sneezing and coughing all around you.  Oh, the life of a teacher.  You know what else looks sick these days?  The U.S. stock market, and China's, and pretty much every other country that has a market has a bad cold.

So we're ten percent down this year and the volatility has been stomach churning for many retail investors.  The tendency for many is to stay away and wait for the dust to settle, i.e., for there to be a conviction bottom to the selling.  Many believe this will take place once oil hits rock bottom.  That could be any time soon.  Barron's reported this past weekend that oil could drop below $20, but not go much lower than that.

I'm here to tell you why this is a great market.  In fact, it's a market that is perfect for beginning investors.  Here are my reasons:

1.  Stocks are no longer over-valued.  The flat finish to last year, and the recent 10% drop has given investors just buying-in a better margin of safety.

2.  You're employed!  Either you've left the workforce to start your own business, freelance, or you are employed.  So you have income coming in and if you budget wisely, you could be placing small trades at the beginning of each month with your monthly un-spent funds.

3.  There are great deals out there.  Seriously...you can buy contrarian plays like Chipotle (CMG) if you like high risk-reward.  You can buy a great growth company like Facebook (FB).  FB is headed into outer space...no doubt the next Netflix or Google for me.  Or you can get shares of a value company like Ford (F) at $11 and change, and get a hefty 5% dividend for your troubles.

4.  The repeated sell-offs make dollar cost averaging a winner's strategy for once.  It's been 7 years of nothing but bull and now the bear is here.  This means you can automate your investing, buying chunks of your favorite Total Stock Market ETF of Mutual Fund, and actually make some headway!  If you can get more shares of a fund at the end of each month, as the price drops in a declining market, you will have more upside once the market turns around.  It'll look nasty at first but don't fret.  Just keep saying to yourself: "My ownership stake in this fund is growing."

5.  It's easier to do and cheaper too.  Millennials can start trading on an app like Robinhood for free!  Robinhood is one of many apps that are currently out there vying for your subscription.  These new generation stock brokerage apps want to make buying shares of stocks easy and affordable. 

There you have it ladies and germs.  Market timing is for suckers.  If you're invested, stay invested.  If you're not in the market...what are you waiting for?  

Thanks for reading.  Until next time.  Peace out!     

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