Investors Only - Welcome to the BIG Buy Low  (cont.)

4. Take a look at the future. Nope, you can't tell when the rally will come or how long it will last. If you are buying quality securities now, as you certainly should be, you will be able o love the rally even more than you did the last time---as you take yet another round of profits. Smiles broaden with each new realized gain, especially when most Wall Streeters are still just scratchin' their heads.

5. As, or if, the correction continues, buy more slowly as opposed to more quickly, and establish new positions incompletely so that you can add to them safely later. Hope for a short and steep decline, but prepare for a long one. There's more to "Shop at The Gap" than meets the eye, and you may run out of cash well before the new rally begins. Cash flow is king, so take smaller profits sooner than usual as long as there are abundant buying opportunities. Today, nearly sixty percent of all Investment Grade Value Stocks are down more than 15% from their 52-week highs.

6. Your understanding and use of the Smart Cash concept proves the wisdom of The Investor's Creed. You should be out of cash while the market is still correcting---it gets less scary each time. As long your cash flow continues unabated, the change in market value is merely a perceptual issue.

7. Note that your Working Capital is still growing, in spite of falling prices, and examine your holdings for opportunities to average down on cost per share or to increase your yield on fixed income securities. Examine both fundamentals and price, lean hard on your experience, and don't force the issue.

8. Identify new buying opportunities using a consistent set of rules, rally or correction. That way you will always know which of the two you are dealing with in spite of what the Wall Street propaganda mill spits out. Focus on Investment Grade Value Stocks; it's just easier, as well as being less risky, and better for your peace of mind.

9. Examine your portfolio's performance: with your asset allocation and investment objectives clearly in focus; in terms of market and interest rate cycles as opposed to calendar Quarters and Years; and only with the use of the Working Capital Model, because it allows for your personal asset allocation. The only index number to use for comparison purposes with a properly designed value portfolio is the brand new IGVSI.

10. So long as everything is down, there is nothing to worry about. Downgraded, or simply lazy, portfolio holdings should not be discarded during general or group specific weakness. Unless of course, you don't have the courage to get rid of them during rallies---also general or sector spefical.

Corrections of all types will vary in depth and duration, and both characteristics are clearly visible only in institutional-grade rear view mirrors. The short and deep ones are most lovable; the long and slow ones are more difficult to deal with. Most corrections are relatively short and difficult to take advantage of with Mutual Funds. So if you over-think the environment or over-cook the research, you'll miss the after-party. Unlike many things in life, Stock Market realities need to be dealt with quickly, decisively, and with zero hindsight. Because amid all of the uncertainty, there is one indisputable fact that reads equally well in either market direction: there has never been a correction-rally that has not succumbed to the next rally-correction.

If you were head scratching on Smart Cash, Working Capital, or The Investor's Creed, hit your search button.

Article Source: http://www.articleinhaler.com

Steve Selengut www.sancoservices.com www.valuestockindex.com Professional Portfolio Management since 1979 Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"