Money & Investing - Banks.com

Today, the stock market is rallying, especially in certain sectors, like energy. With the stock market on the rise, now may be a good time to get in on some solid stocks that have plummeted in recent weeks. Such venerable companies as ExxonMobil (XOM) and Coca-Cola (KO) and General Electric (GE) are at reasonably low prices right now. It could be time for some serious bargain hunting in the ranks of value stocks.

Warren Buffett thinks that now is a good time to go bargain hunting as well. Here is what he wrote in a New York Times Op-Ed piece:

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now. …

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

While Buffett admits that he can’t predict short-term stock market movements (no one really can), he does have optimism for the future. And this is because over the long term the stock market gains. Well, this has traditionally been the case. Buffett has been wrong on some occasions. No one’s perfect, even the “Oracle of Omaha.” But I agree with JLP at All Financial Matters: Buffett is right a lot more than most other people. And I certainly think he’s right about this.

You can buy some well-chosen small caps (which, while they lose a lot in downswings gain a great deal in upswings) for dirt-cheap, and balance them out with some great bargains in solid value stocks. You’re going to get more bang for your buck right now. Just be careful that you choose stocks that are likely to survive now and thrive later.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.