Most Difficult Time To Buy Stocks

When everything is humming along, companies are earning more money each year, and the markets are rising their standard 8% per year, buying stocks is easy. It feels good to add to positions and start new ones, and you are usually rewarded by a nice increase to the dividend or a significant share price rise over the course of a year. This is not one of those eras...

I think most would agree that this is a very tumultuous time in the stock markets. During those good times we might think that the current awful conditions would be great times to buy stocks and we might even wish for market crashes. What we are experiencing now and seeing every day, week, and month is that it is not quite so easy.

These declines are drastic and the problems are real. Companies are cutting dividends which makes investing difficult when a dividend is used as a good gauge of a company's health. Nobody wants to buy a stock only to see it decline 20% in the next month after they own it. Nobody wants to buy a stock and see the company cut their dividend after your purchase. Usually when you make a stock purchase you want to buy with confidence that the company is undervalued and they'll grow their earnings faster than the market is giving them credit for. Nobody finds it easy to buy stocks when their earnings are expected to decline for one and maybe more years.

If anything as investors we can be heartened that at least we are gaining some experience in one of the toughest stock markets ever.

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