Here’s Your Chance, Latecomers

Friday was the crowning moment of a bad week. Caterpillar came in with weak earnings and fell 5%. Such a stalwart collapsing was enough to fold weak hands on the anniversary of Black Monday 20 years prior. Forecasters of gloom raised their arms in victory as the Dow shed 2.6% for the day.

I wrote last month that we would not see another Black Monday, and we haven’t. Some disingenuous pundits are using Friday’s sell-off to claim prescience in warning us of an impending repeat of 1987. Please. Twenty years ago, the drop was 23% in a day. Friday’s 2.6% drop is fairly routine. Anybody in this business knows that and should not exploit the coincidental timing to capitalize on fears.

Another idea I wrote last month was that any weakness this month would be the opportunity for latecomers to finally join the rally underway. I still feel that way. We have weakness, so now’s the time to get into the market if you haven’t already.

Look carefully at the reasons behind last week’s drop: sub-prime, high oil prices, declining dollar, economic uncertainty, accusations of a befuddled Fed. Do you see anything new there? No. It’s the same bear list we’ve seen for a long time. New fears — unforeseen — would be greater cause for concern because big drops are usually surprises. Last week was just a normal amount of market shakiness. It’s weakness that should be bought. It’ll probably persist a little longer, but is nothing cataclysmic.

Keep your perspective here. The market stepped down three rungs on a tall ladder that’s gone almost vertical for two months. The dizzying heights have been reduced, but the ladder is still in place and the climbing will resume.

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