For those of you not into value investing to create long term positions, I know this will totally go against everything you have ever heard of, but stay with me on this.

At the end of last week, the stock market took a beating.  Stock prices fell almost across the board.

I’m happy.  Only way I could be happier is if the prices fell further.

No, I’m not ready to get a bunk at the loony bin.  It’s simple.  The market was due to a correction.  Basically a correction means that the market was either under, or, as in this case, over priced and needed to be fixed.  Too many people buying a driving stock prices up creates an artificial price relative to the company’s actual value.  No matter how long it takes, there always is a correction.

Now, why is the stock market taking a beating a good thing?  Easy.  Stock prices are lower and you can get better deals on your favorite stock.  Think of it as a sale for stocks.

Let me give you an example, and I’ll use one of my own stock positions to show it.  Let’s get something straight from the start first:  I am not saying you should buy this stock!  It is a stock that I own, researched, and believe is a good investment.  I have a long term position in it and do not see selling it anytime soon.

Frontline Ltd (FRO) is a oil tanker company.  They haul oil from the oil producing companies to refineries in other countries.  Earlier this year I bought in at $35.63 per share.  Before the correction, FRO was trading just over $50 per share; as of Friday afternoon, they were down to $44.90.  (FRO Stock Chart) It’s a good start, but based off my research I don’t plan to buy any more shares until it goes below $37 per share; in my opinion $40 is a fair price for the stock, but I like to buy on sale.

If you have some stocks that you own and thought, until the correction, that they were good stocks you have to ask yourself.  Has anything actually happened to the company that caused the share price to fall?  Was there any bad news or was the lowering in share price just due to the sell off Thursday and Friday?  My suggestion is that if you still think the company is a good one, a sound investment, wait.  Wait till mid-day Monday or Tuesday to see how the stocks are going.  Usually Monday’s are when everyone jumps back in after a big correction, but make sure that you’re at the rock bottom before you start buying again.

Buy stock of a quality company when prices are low.  If the company is good, you can’t miss!

If you don’t buy stocks but are interested, if you look at the sidebar to your right you should see a referral ad for Sharebuilder.  Google AdSense has allowed me to pick and choose what products I can refer instead of just getting whatever product their contextual software shows up.  I chose to promote Sharebuilder for one very simple reason: I use it.  I’ve been a customer of Sharebuilder since 2000 and love it!  It’s created for those just getting started in stock investments and don’t have much money.  Normally, when you buy stock, you must buy a full share of stock; not with Sharebuilder.  Sharebuilder allows you to buy a percentage of a share of stock if you don’t have enough for the entire share.  For example, FRO is trading at $44.90 but say you only have $25 per week to invest.  Sharebuilder will allow you, for a $4 per stock fee, to invest the $25 to buy just over half of a share!  You get full benefits of owning that part of the share: dividends (equal to the percentage you own), and voting rights.  Check out Sharebuilder.  It’s free to join and there are no inactive fees.  You can’t lose!

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