Monday, August 8, 2011
Do you have your seat belt on? The market is falling faster than a plunging roller coaster at your local theme park. This could be a fun time to be an investor, or your worst nightmare...depending on your mindset. It's a great time for me. Some of my favorite companies are trading at 15-20% discounts from just a month ago.
This market correction could be viewed in a number of different ways. Some investors and economic analysts do not think the market should have been as high as it was just a month ago. It was likely artificially inflated by the Fed dumping money into the system by buying up bonds and forcing investors into equities. In that case, this market is still likely inflated. I'm a simple man at the end of the day. I think in any market there are companies trading at favorable and unfavorable valuations. That was true a month ago, and it's still true now. You could also view this market correction as an absolute bonanza buffet in which you come in with a full wallet and empty stomach. I'm pretty hungry.
In case anyone isn't clear, I am gainfully employed in a workplace that pays me 100% commission. I earn no hourly wage or salary. I usually get paid one large check at the beginning of every month. I just happened to get lucky this month, and I got my large check on August 4. That day just happened to see one of the biggest 1-day drops the DOW has seen since the crisis in 2008 (since eclipsed by today's drop). Great timing on the part of my job. I, however, did not have the greatest timing with the deployment of that capital.
I purchased 15 shares of Chevron (CVX) at $99.94 a share on 8/4/11. I made this purchase mid-morning when the DOW was down almost 200 points. Chevron was already down considerably over the last month, and I had my eye on increasing my holdings below $100 per share. When it dipped below, I figured I would take that opportunity and increase my holdings. As we all know, the afternoon absolutely murdered the market and it has been down ever since. Chevron is now trading for $90.25 a share. Again, great timing on the part of my job by paying me my large check on 8/4, but bad timing on my part by purchasing in the morning.
Foresight is a superpower and hindsight is 20/20.
I love energy at these levels. I have my eye on so many equities my head is spinning. Energy has really fallen recently making COP and CVX tremendous buys right now. I hope this bear market continues for many months to come.
My purchase came with an entry yield of 3.12%. It will provide me with a yearly dividend total of $46.80 based on the current payout. Overall, I'm happy with my purchase. Obviously, I would have LOVED to have made my purchase today instead of last week. I simply can't predict the future and I always look for value on my price. I initially purchased Chevron as it made its run to over $100 a share and always wanted to increase my holdings, but wouldn't when it was trading at those levels. It dropped to what I consider a good value on my money and I pulled the trigger. That's what I do.
This market should continue to be very interesting for the near, and possibly, far future. I'm excited!
What are you buying?
Thanks for reading.