Is it foolish to be bullish? Some money gurus advise it's time to start buying stocks
Tourists visit Wall Street and the New York Stock Exchange on Friday. (AP)
By Garett Sloane
gsloane@am-ny.com
The Dow Jones may appear half empty right now, but that just means the stock market is full of buying opportunities, optimistic market observers advise.
Investors are selling everything -- the good along with the bad, according to Vahan Janjigian, chief investment strategist at Forbes.
“I think there is a panic right now,” he said. “A lot of people are selling when they should be buying. People should be taking Warren Buffett’s lead.”
Buffett, the “Oracle of Omaha,” has invested billions into Goldman Sachs and General Electric as those stocks have plummeted, a move consistent with his oft-repeated philosophy: Be greedy when everyone else is fearful.
And even as countless people are hurting, some New Yorkers are taking Buffett’s cues. “I am investing,” said Lisa Kelly, 28, a teacher from the Upper West Side. “The market is low. I’m young, and it’s going to go up.”
It’s hard to envision that right now. The historic stock collapse has pushed the Dow Jones industrial average below 9,000 for the first time since 2003 and the S&P 500 below 1,000 for the first time in five years.
The sell-off is spurred by a number of factors, including hedge funds that are unloading their top-performing stocks to pay off investors who want their money back. A flood of brokers also is pushing investors to recoup on declining stocks that were purchased on margin — borrowed money. Investors are dumping their good stocks to pay for those bad ones, which means shares in fundamentally sound companies are taking a hit, too.
“A few stock have been absolutely pummeled and we consider them incredible bargains at the current price,” Janjigian said.
A few fatal pessimists are predicting this is the end of capitalism, but those with a little more hope believe the bust will pass.
“These once-in-a-generation opportunities represent a great time if you are a long-term investor and fundamentally believe in our free enterprise system,” said Mark Brown, a certified financial planner with Brown & Tedstrom in Denver.
Not everyone sees this moment as a buying opportunity. David Shaev has seen too many people lose it all in the markets: He’s a bankruptcy lawyer.
“If you’re trying to pick stocks right now, you might as well go to Atlantic City,” the Manhattan lawyer said.
Still, the opportunity for fortune is alluring,
“I don’t think we’ve hit bottom yet. When I do think we’ve hit our bottom, I’ll jump back in,” said Candy Straw, 44, of Sunnyside.
Stocks have not hit their lows, Janjigian said, but that doesn’t mean it’s not time to start putting money into balance investments like index funds.
“You may regret it tomorrow or a week from now,” he said. “But chances are, a couple of years down the road, you will be very happy.”
Amanda Magnus and Tribune Media Services contributed to this report.
