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Time to buy? Everybody is panicking, but Buffet is buying!

It is not easy seeing your investments sinking and it is not comfortable seeing the market in correction. At least it is not comfortable for me. I can see; however, that all this mess in the market is just pure overreaction and unreasonable panicking. First the market was plummeting because of fear of crisis in Libya, then because of high price of oil, then because of low price of oil, and now because of disaster in Japan. From a short perspective that tragedy in Japan may look like a catastrophe (from the market point of view, not the human tragedy, which is great), but look at it the other way: Japan is a very strong economy and Japanese are very agile people. They will not give up on this tragedy. They will start rebuilding what was destroyed. So why panicking?

Actually I consider this sell off as a blessing and a great opportunity to add to my positions or buy new positions for better price. For example adding Johnson & Johnson stock to my portfolio in trading account is a great opportunity. I have bought this stock to my Roth IRA at around $58 a share. Now the price is at this level and I can buy this stock for great price in my trading account. And there are many other excellent stocks which are driven down by today’s panic.

A great sensor of what’s actually happening may be seeing what the Omaha Oracle is doing these days. He announced that he has 40 billion of dollars ready for acquisitions and sure recently he purchased Lubrizol. So when everybody is panicking and selling their stocks off, Warren Buffet is buying. If he wouldn’t trust in the economy, he wouldn’t do it.

However, I want to follow W. O’Neil’s advice not to be buying when the market is in correction. So I am waiting and saving money for new purchases. The market may continue falling a few more days or even weeks and buying now may lock my positions in stocks which will fall further down and and lock me in a paper loss. I do not want that so I will wait and start buying when the market changes into confirmed rally. A great example would be HGIC position I have opened recently. Since then the stock tanked by c. 12%. I know that the reason was their poor economical results, but the market was already in correction so I should have been waiting. It could save me some money and I could buy cheaper these days. Since the stock is not cutting dividends it appears to me that they will do well in the future and waiting could be a great opportunity to buy this stock cheap.

Let’s see what will happen next few days and be ready for adding to your portfolio. It is time to be buying.

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