There are generally 4 situations that create good stock buying opportunities.
They are:
- Stock market corrections and panics
- Industry recessions
- Individual business calamity
- Business structural changes
We are currently in the middle of bad news phenomenon #1. Unfortunately, no one knows at this point if the stock market will rise or fall. Some analysts predict that this is just the beginning of the long brewing financial storm while others believe things are calming and getting back to normal.
I believe the storm is just beginning. The US government has been putting band aids on the financial imbalances and debt that has been growing since we were taken off the Gold standard in 1931.
Even after the big drop in the DOW from 14000 stocks are still way overpriced if you look at their PE ratios. Also if you take a look at dividends per earnings per share they are far below the historical average.
It’s time for the US government to stop meddling with the financial world and let the system work itself out. Banks need to fail. Assets need to be deflated. People need to lose jobs if businesses can’t run on their own. Trade imbalances need to be restored. Most of all, large business and financial institutions need to stop getting bailout money!
If the stock market takes a big dip again as many expect it to it could be the perfect time to make great investments. Always be sure to do your homework and due diligence before putting money anywhere. Work as hard investing your money as you do making it!
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