Rational Investing: Stock market slide results in good opportunities

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I was in the booth behind them, eves-dropping you would call it, because I recognized them as guys I had overheard a couple of months earlier at the same Steak N Shake. On that occasion they were talking about stocks, tossing around some names and technical terms I wasn't familiar with, although it appeared to have to do with computer systems. That first time eaves dropping didn't do me any good. I did an Internet search for what I thought were the company names they mentioned, but nothing came up.|ret||ret||tab|

This time I would do a better job of listening to their conversation. You never know when you might pick up some valuable information.|ret||ret||tab|

The guy holding the double steakburger with cheese in his left hand was wiping mustard off his chin as he asked, "Take your kids to that Lilo and what's his name movie?"|ret||ret||tab|

The man sitting across from him in the booth shook his head no, saying, "Nah, not yet," in a dropped voice monotone that let his disinterest show through.|ret||ret||tab|

"Umpf, mmm arn," the first guy muttered, then it was quiet for several minutes except for the chewing sounds. The next words I could understand had to do with splitting the check. Then they were gone.|ret||ret||tab|

Driving back to work, I thought about the difference the reverse indicator to the one I wrote about several years ago. It had to do with identifying market tops. One of the signs listed was people at parties talking more about their mutual funds and stocks than about their kids. |ret||ret||tab|

In the case of the steakburger duo, their talking about their kids, limited though it was, gave me pause. I wondered if this was a sign of a market bottom approaching. Another sign mentioned in the original article concerned a barber or hairdresser talking about the investments he or she owned, rather than sports or whatever, so I decided later in the week I would get a haircut and see what my barber had to say on the subject.|ret||ret||tab|

"To tell the truth, I have been too busy to pay much attention to investments lately. Besides, the market isn't too good right now." He changed the subject to fishing.|ret||ret||tab|

OK, so it's anecdotal and not scientific, but I wouldn't ignore it. |ret||ret||tab|

Along these lines, let me share with you what I recently wrote to our clients (coincidentally, it was only a couple of days before the Worldcom created sell-off).|ret||ret||tab|

The expression has been around a long time, one that investors have heard often, but this time, "Only two things move markets to extremes fear and greed," is about as on target as it was during the bear market of 1973-74.|ret||ret||tab|

Sure, fear hit the market in 1987 and 1990, but those sell-offs, unnerving as they were at the time, were short-lived corrections within the context of a bull market.|ret||ret||tab|

What we have been going through for the past couple of years is the kind of gut-wrenching bear market that tries the patience of even the most experienced investor. From irrational buying of the dot-coms in March 2000 (the greed part of the expression) at the peak to increasing irrational selling (fear) at the present.|ret||ret||tab|

Does the current activity indicate we are close to the bottom of the correction in the equity markets? That's something we will know months from now as we exercise the 20-20 vision of hindsight; however, the level of concern expressed by indiscriminate selling indicates that we are getting close.|ret||ret||tab|

One of the positives of the greed/fear factor is the opportunity to acquire, or add to, ownership positions in some of America's best companies. That's what we did during the final phases of the 1973-74 bear market, the 1987 correction, and the Gulf War sell-off. That's what we are poised to do again.|ret||ret||tab|

If you are an investor with a time frame beyond this year, take advantage of the sale that is going on. Turn off CNBC, do your investing homework, establish your positions, then enjoy the summer and if the latter involves golf, give me a call.|ret||ret||tab|

|bold_on|(Clark Davis is a 30-year investment veteran and CEO of Saint Louis Investment Advisors, a specialized money management company. Questions or comments can be directed to him by mail via The Springfield Business Journal, 313 Park Central West, 65806 or by e|bold_on|-mail at sbj@sbj.net.)|ret||ret||tab|

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