If investing were always a walk in the park, we would all be Warren Buffett.
Truth is, there are always tough times. And after more than two years of one of the strongest bull markets we've ever seen, the market is starting to turn lower... quickly.
Now we have credit downgrades, mushrooming problems in Europe and a globe full of investors who simply don't know what's next.
I don't know where the broader market will go from here. And I won't try to predict where we will be in a week, a month or a year.
But there are a few things I do know.
First, as I told investors subscribed to my Top 10 Stocks advisory, no matter what happens there will always be select companies that are able to make money and treat shareholders right by buying back stock or increasing dividends.
These are the types of companies I highlighted in my "10 Best Stocks to Hold Forever" report. In fact, one of these ideas, MasterCard (NYSE: MA ) , soared 13% on Thursday, Aug.4, (on a day in which the Dow lost more than 500 points), following a great earnings announcement .
Now, that's not to say "Forever" stocks don't fall with the market. But I continue to believe holding stocks you'd be happy owning forever is one of the best moves you can make right now.
In the meantime, I still hold the bulk of my $100,000 real-money Top 10 Stocks portfolio in cash. I think keeping cash on the sidelines is a smart move in this environment. Not only will it help you sleep better at night, but if the market continues down, then it provides an opportunity to bargain hunt for those securities you'd like to hold for the long term.
Action to Take --> In particular, I am keeping an eye out for dividend-paying funds trading at large discounts to their intrinsic value . Often in panic sell-offs investors will dump funds, sending the share price much lower than the underlying value of a fund's holdings. This provides a chance to buy into a quality fund at pennies on the dollar -- while also locking in a higher-than-usual yield .
But I haven't bought or sold anything just yet. Overall, our Top 10 Stocks portfolio is holding up better than the broader market. So long as there is nothing intrinsically wrong with the companies I own, I see little reason to panic.
However, if the market continues to fall, I'll move quickly to snap up stocks I'd like to own "Forever."
[ Note: If you want some more evidence why I think buying "Forever" stocks is one of the best moves you can make -- in any market -- you can read past analysis here and here. If you'd like to learn more about my 10 Best Stocks to Hold Forever, visit this link. ]
Disclosure: Neither Paul Tracy nor StreetAuthority, LLC hold positions in any securities mentioned in this article.
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