Buying Opportunities Ahead

                                  BUYING OPPORTUNITIES AHEAD

Written by Charles D. Vaughan, CFP® Chartered Retirement Planning Counselor

The latest selloff in stocks has many investors on the edge of panic. For those who own a high percentage of growth stocks that have gone up a lot in the past two years, maybe they should be.

Other investors, who have stayed conservative and hold substantial amounts of cash and short-term bond investments, may soon find this to be a buyer’s delight. We all know that the way to make money is to “buy low and sell high”. However, it is impossible to buy low if stocks don’t go down. In that case, we can only buy high and sell higher. That has been the theme for active traders over the last few years. Meanwhile, there have been few attractive values, let alone bargains, in domestic stocks for some time.

The popular stock indexes are virtually all down so far this year and many sectors, notably energy and other cyclical industries, are down massively. The S&P 500 index of large capitalization stocks has nearly half of its stocks down more than 20% – the standard for a bear market definition. According to CNN/Money, last week there were only 18 of the 500 stocks in the index showing gains for 2016.

This can be scary when we see account values declining, but it may well provide us with opportunities to make adjustments to improve our long-term growth and income prospects. There are a number of solid values emerging in stocks offering good growth potential and dividend yields.

Those investors holding cash and short-term bonds positions are in the driver’s seat. At some point we will be issuing recommendations to take advantage of these investment opportunities, hopefully at bargain valuations. Meanwhile we watch and wait.

As always the key is to exercise patience and diligence and not to get caught up in the emotions of the moment. Remember stocks cannot always go up, but also they do not go down forever – they fluctuate over time. The goal is to take advantage of these fluctuations. You know – buy low and sell high.

We appreciate your continued confidence and support.

Charles D. Vaughan, CFP^®                                                                Keith J. Bookbinder, MBA

Chief Retirement Strategist                                                               Chief Investment Strategist

First use: January 26, 2016