The Great News About All the Bad News

Every optimist will tell you that there is always the opposite side of bad news... good news. There is always a silver lining. The needle is somewhere in the haystack , if you look hard enough for it.

So, the bad news is we have some issues with the economy. Stock market woes, rising oil costs, unemployment and job loss due to outsourcing are a few of the concerns. Let's concentrate on the stock market for now.

Does anyone think the reporters get commissions on how many bad things they can report on? The "mad currency guy on TV".. can he be any more negative? A skeptic may wonder if he recommends selling to everyone; then goes and buys up what he wants at reduced prices.

Newsflash: The stock market goes up and it goes down. Recently its been trending down. Not a reason to go sell off your whole portfolio.
Quite the contrary, some crazy aggressive people may say. Who are these brash, radical people?

Well, history tells us just how several of the wealthiest investors built their fortunes. They used a is a simple formula that most, if not all of us, are familiar with . Its called BL-SH ( BUY LOW and SELL HIGH).

Have you ever heard of investment gurus Peter Lynch, Warren Buffett, and Ben Graham (the pioneer of value investing)? What about real estate tycoons Steve Wynn (Mr. Las Vegas), Donald Trump and Conrad Hilton (you may know of his great granddaughter Paris, or you may have stayed in one of his hotels somewhere on the planet)?

What quality do all of these giants have in common? Other than putting their pants on the same way... they all subscribe to the BL-SH method.This is one way to gather great wealth. When the masses are selling scared (thanks to a ultra negative media), who do you think is gobbling up these companies at extremely reduced prices?

Here is a case history of 3 solid NYSE companies.

Johnson and Johnson (JNJ) in 2002 was at a high of $65 and crashed to a low of $41 in 2002. The proverbial sky was falling, people were very nervous and JNJ was in major trouble as the market was going "bad". Some bad periods last longer than others. Nonetheless, JNJ keeps doing what it does best, making baby shampoos and powders and other household items we've all used since we can remember. So did JNJ survive? In the last 3 years JNJ had traded between $59- 70 and today is at $64. Wish I bought in 2002 when everyone was seilling in the $40's.

Abbott Labs(ABT)is another rock solid company. Similarly, it was at $58 in 2002 and went all the way to $29 ( people lost 50% of their investment, IF THEY SOLD). The last three years its been between $37-61 and today its at $53. Another one I'd love to have bought, even in the high $30's.

Stryker(SYK) is another incredible cash cow. In 2002 investors of Stryker saw it go from $33 to 21.. a 34% decline for a rock soilid company. Cause for concern?? The people buying in the last three years have seen Stryker in a $39-77 range, and today at a tempting $62. Stryker has increased its earnings 10-20% per year, for as long as I can remember, and if management is correct, the future looks pretty bright too.

Enough math. The point is if you own solid companies, why get all nervous and sell because some so called "expert" on tv has told you all the scary reasons why our economy is doomed? As always, do your homework and buy good solid companies with track records that consistently churn out a profit. Sell, if you think there is a good , viable reason to sell. Look around. Have your adviser/ broker/ investment person find you 10-20 stocks that are rock solid. There are several hundred out there to choose from. And, they are "on sale".

Don't forget a few famous laws of physics. For every action there is a reaction. For every problem, there is an opportunity for those looking.

There is an old saying "Don t be afraid to go out on a limb, for that is where the fruit is". The great news is some of that "bargain fruit" may turn out quite tasty.