Is it different this time?

Another tough day for most market participants. September ends as the worst month in the past seven and the indexes have all dropped about 5% in this month alone, although the Nasdaq listed stocks have fared even worse. It is all the same worries, rising interest rates, inflation, China, supply bottlenecks and various economic indicators that came in weaker than expected. This grim litany was made worse by the general perception that the Fed may be less accommodating in the future. The mood is subdued at best.

Since most of the dips in the past few years have been buyable opportunities, many are wondering if this decline should be bought. Others think, the Fed pulling back will make this time different. But then again, “this time it will be different” has been the battle cry thought many other market down turns and yet here we are, higher than we were ten years ago. Yes, it may be different. It may take a little longer to pull out of this malaise, but you should still be thinking about buying the stock of good companies here. My rule of thumb is that if a stock you want is down 10%, buy a little. Buy more if it continues down.

Just make sure the company has a product or service with solid demand. That it makes money and its balance sheet is strong (not highly levered). Preferably stick to a company whose product you use or understand. Ideally one that is growing, either by adding more customers or more locations. If you use the product it makes it easier to keep track of it. Go for the company with the best reputation among its competitors, who has management who are recognized as capable and good leaders. You can’t go wrong buying these types of companies when there is a downturn, even if the downturn is ‘different’. And while all downturns are uniquely different, they all eventually end. Just suck it up and remember you are in it for the long term. Set backs and downturns are a natural part of life.

Market Today: While the market opened up, it gave up the ghost and then it was down, down, down into the close. Nasdaq tried to stay positive but it too fell into the close. Not much to do but sit on the sidelines. Looking at buying tomorrow as Fridays tend to sell off into the weekend. But then again, it is a new month so who knows. We may be surprised with an upturn in the morning. If we do, I may use it to trim some winners.