Why it is a bad idea to stop investing now

The markets are in turmoil. Everywhere you hear accounts of banks going down and banks being taken over by other banks. The stocks which you bought one year before, has halved in it's value. The markets are all heading southwards and the investor confidence is at an all-time low.No one knows for sure when the fogs will clear. So it is better to stop investing for the time being and wait for some semblance of sanity, right?

Wrong. If you are the kind of person who invests for your retirement or your child's college savings fund or any other long-term goal, it is actually a good idea to invest RIGHT NOW. This is the perfect time to get that overvalued stock that you have been tracking for a long time but couldn't buy because you thought the price was too high.

Fear and greed are two important factors governing market fluctuations. In times like these the most important thing is to remain focused on the fundamentals, so as not to get carried away by the daily volatility and swings in emotions. The fear factor is at an all-time high now which, when backed by tightened illiquidity can result in indiscriminate selling. This leads to a situation where the stock price becomes disconnected from the securitie's fundamentals. In other words the stock price is much less than the underlying value of the stock. In much simpler words it means that that overvalued stock that you have been tracking for a time might well be undervalued right now!

No one knows for sure when the markets will end their downward spiral but no body expects that it will continue for the next 20 years as well. Somewhere along the line the markets will correct themselves (no matter how painful the correction is) and then you will be happy you bought your stocks at those dirt-cheap rates.

If you read my blog "Is this beginning of the end" you might be thinking that I am double talking. The truth is that in this era of globalization, the big corporations are an entity by themselves and are not tied to the economy of one country alone. So even if the american economy is going down (I am an optimist though :)), they will still be making handsome profits elsewhere.

So what are you waiting for? Go grab that stock!