Thursday, March 26, 2009

Signs That Mr. Market Is Offering Great Prices

Thanks to what he calls an easy but effective investment approach, Derek Foster retired at age 34. He wrote two books, Stop Working and The Lazy Investor, which extolled the virtues of investing for the long term. In those books, Foster suggests buying great businesses that pay dividends and holding them forever: "Remember selling stocks, like divorce, comes at a high cost."

Foster is also active on the web, further educating users on his methodology, as he wrote this in 2005:

Stock market crashes generally don't affect dividend payments for the kinds of investments I own, so I welcome a market crash with open arms! It simply won't affect my retirement.

So Foster must be salivating at current stock prices, right? Or at the very least, surely he's sticking to his investment philosophy? Actually, Foster has decided to completely liquidate his portfolio! In a stark demonstration of how market psychology can dramatically alter sound, logical behaviour, Foster has completely reversed course.

Foster is now quoted as saying that this economy is going through a paradigm shift, and he does not want to hold stocks through that period. But in the very same interview, he states that this is just a 'temporary thing', and that his absolute goal is to get back into stocks.

It is precisely this type of psychological effect that stock market crashes have on investors, which allows value investors to buy companies at terrific prices!

2 comments:

Erica Smith said...

Hi,

This is Erica Smith, owner of some quality financial websites having strong internet presence,high traffic and good quality content. As I found your website is very much relevant to my one, I'd like to have you as my link partner.

I have few other finance sites/blogs(with good pr) to link back to your website. I have
several brand new finance related article(250-300 words) which I wish to post in your site and it will enrich your site.

All the websites of mine are frequently cached and the articles get updated almost every week.

If you agree to do link exchange with me, then both of our sites will be benefited in terms of visitors and page ranking.

Have a nice day.

regards,
Erica Smith
ericasmith568(at)gmail(dot)com

optionsnut said...

This is nice to come back and read. I quite enjoyed reading about him at the time.

Its funny how close your comments came to the bottom of the market.

A very impressive bit of luck or perhaps foresight.

D

Follow by Email