View the full cat chart at Wikinvest

Cat Stock Blog

Caterpillar Inc. (NYSE:CAT) stock news and links

Archive for the ‘Cheap stocks’ tag

Should we be buying stocks now?

One of the folks at Motley Fool looks at the deep discounts on a basket of popular stocks (Cat: minus-41.5) and suggests they may be worth a look.

Sure, even great bargains like these may fall further after your initial purchase, but in the long run, they should still do very well for you. Cautious investors, consider buying in thirds — a third of what you intend to buy now, a third in a few months, and so on.

The posts also recommends getting around to other chores you’ve been putting off, like rebalancing your portfolio.

I’m good at watching stocks, not so good at deciding when to buy or sell. But I do know that buying stocks during a downtrend is begging for a nervous breakdown. Go for the gusto if you have nerves of steel; otherwise, take it slow and easy and save your greed for the day when the trend becomes your friend.

The buy-in-thirds advice is sound because the ability to make money depends on how much you buy them for. Which is why dollar-cost averaging via a 401(k) is such a sound strategy: you buy more when stocks are cheap and less when they are expensive.

The lesson of the past year, though, is you should not have money in stocks that you expect you’ll need in the next couple years. Stocks can and do lose half their value or more — and it tends to happen at the least opportune time.

no comments | Permalink | Tags:
Tom Mangan posted at 10:15 am December 16th, 2008 |