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Remember that true character and true friendships are revealed during the bad-times, not the good times.

Now, I know the question on your mind, and we will get to that in a minute.

But first of all, you must ask yourself this important question: Why do I invest in the U.S. stock market?

This should be your answer and if it is not, then you do not belong in the U.S. stock market:

“I invest in the U.S. stock market because I believe in the future of America, i.e., I am bullish on America’s future.”

Now – including the tragic events of Tuesday – I am personally very bullish on the future of America. How about you?

If your answer is no, then join the lemmings when the market opens Monday, and sell your stocks.

I am willing to bet you will be sorry you did.

To be the most successful (and most envied) democracy/capitalistic society on this planet, we must occasionally pay a deep price for this privilege, as we most certainly did on Tuesday.

For those under the age of 40, this was probably the first real-time reminder of that in their life.

In the overall scheme of things, what this means to the U.S. stock market, in the long run, is really nothing but a blip in the charts (and if you look back in five years, you will know what we mean).

Nothing has changed. We are still the most envied society in the world. We still have the strongest economy in the world.

We do not mean to belittle the tragic events of this week but, lets face it, some of our people have been caught napping.

Here is one example: There has been a hard argument going on as to whether Clinton let our defense/intelligence communities slide during his administration. We got our answer to that this week, in spades.

To this end, Secretary of Defense Rumsfeld has been leading the charge to start the badly needed rebuilding process in the defense/intelligence area.

The liberal line, oft repeated on the cable TV programs and at cocktail parties was: Why do we need a strong defense? We don’t have enemies anymore. Oh, really?

Up until 8:30 a.m. last Tuesday morning, the Democrats were united in their resistance to spend larger amounts of money in this area.

You can bet your bottom dollar that the Democrats have now changed their stripes on this one. (A real bedside conversion, eh?). Daschle, Gephardt and the gang will now be pounding the table for more defense spending. They will (hypocritically, of course) act like they have been for increased defense spending all along.

Question1: What will happen when the market opens on Friday (or more likely) Monday?

Answer1: We are no better than the next person when it comes to short-term market predictions and, of course, almost everyone is expecting that the markets will be down big on the opening. I doubt if it will be as bad as expected. As usual, what we must do is look within the seething cauldron.

The first thing we would say is this: You need to make the distinction here between weak companies and strong companies and, for now, stick with the strong.

Don’t go bottom fishing here. Weak companies will likely be more weakened by this unfortunate event, and pushed over the edge, so avoid the urge to buy fallen angels.

The strong, by their very position, will become stronger and, here, let us get more specific.

Insurance companies – This will be a horrific hit for many insurance companies. Two that come to mind are American International (NYSE: AIG) and Berkshire-Hathaway (NYSE: BRK/a or b). You can expect these stocks to drop 10 to 15 percent when they re-open.

But that said, these two A+ rated outfits were well prepared for this event. The fact is, these companies will do just fine, and will go on doing what they have done so well for decades – provide insurance for clients, and make money for their shareholders. So, we would consider the drop to be a buying opportunity for these two.

As for the weak insurance companies, especially in the property, casualty and life insurance areas, this may severely hamper their future, and they may never recover.

This is why “ratings” are so important for insurance companies. Insurance companies with B or below ratings that are involved are the ones you want to avoid.

The Airline business. Obviously this will be the biggest hit taken. Our confidence in the airline business has been shaken to the core and it will take time to recover. In my personal opinion, airline stocks have never been good stocks to own (especially for buy/hold investors).

You can also expect to see a lot of mergers come out of this situation.

There has been a lot of blubbering in the media in the last 48 hours about the fact that this event will push us into a full-blown recession.

I heartily disagree. The fact is, Greenspan will open the Fed window wide, and America will go on as it always has.

If you have faith in the American system and the dream we all work for every day, then you should consider the stock market a viable (if sometimes erratic) way to build wealth.

The thing we would remind investors is that no one (despite what you might hear from others) can successfully time the ups and the downs of the stock market consistently.

That is why your long-term investment plan should include steady, monthly buying of stocks.

Buy the big dominators (AIG, BRK, BNI, CP, CINF, XOM, DNA, HSY, IMO, MSFT, MOT, MRK, PEP, PFE, SLB, SC, SFD, SYY, and WMB are our favorites). Re-invest the dividends through a DRIP program, and have patience.

This, too, shall pass, and America will continue to be the greatest story ever told. Each and every one of us that lives here should be thankful for this privilege, thank God for our luck, and say a special prayer for the families that have paid the ultimate price for our individual blessings. America, the beautiful, is still beautiful, despite what our enemies might wish for us.

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