An easily forgotten truth of investing is when prices are high, skies are sunny and when prices are low it’s stormy.  In other words, successful long term investing involves turning cautious when things look good and aggressive when things look bad.  Sunny = Sell High, Stormy = Buy Low.

Best Time to Invest

Think back to last July when there was oil in the Gulf of Mexico and the TV and radio talking heads were all convinced we were going into another recession.  Did those mid-summer days feel like the best opportunity over the last year to invest?  Since then, skies have brightened considerably and stock prices have risen about 20%.

Fear = Opportunity

We don’t know which way the Middle East turmoil will resolve.  It could be positive or negative in the short run.  In the long run we don’t think it matters, revolutions and geopolitical turmoil is the norm rather than an exception.  Short term scares provide the opportunity to pick up stocks at low prices from those who are selling out of fear.

So if market conditions get worse, how are you likely to react?

Photo Credit: rkramer62