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  • Cody Willard:

    Buying When Some of the Risk Seems Priced In
    3/31/05 8:26 AM ET

    Ever notice how often you read that "the markets are at a particularly important place right now"? Are there ever "unimportant" junctures?

    Certainly there's plenty of importance and intrigue in the market set-up now: We've got the concerns over a vigilant Fed, rising rates, higher corporate spreads, GM falling apart, AIG self-destructing, commodity-fueled inflation concerns coupled with collapsing commodity stocks (which some say indicates a slowdown ahead), ugly technicals in the charts, the costly rebuilding of Iraq, Social Security reform confusion -- sheesh, it's exhausting just listing all the "important issues that the market is facing right now."

    A question I've been getting from readers is why would I be getting aggressively long with all of these issues in the market. A better question might be why would I have wanted to get long back in December when there were few concerns and lots of positives in the marketplace?

    I had many conversations with bulls back in December who kept saying that there was no reason for the market -- especially tech -- to go down. Tech utterly crashed since, with the broader indices down nearly 10% and many stocks down multiples of that in the months since euphoria reigned. I think it makes much more sense to buy when things are ugly and can then improve, which can provide the fuel that makes stocks rise.

    "Buy when there's blood in the streets," as Bernard Baruch once famously put it.

    Of course, I might be way early -- and of course, the economy might come completely unglued and stocks could crash. That's called risk. I simply would rather buy when I think that some of the risk has been priced in.

    The guys buying and selling the futures early this morning are indicating that the market will start off flat-to-strong. It's a long day ahead (and a long year ahead too, I might add), so let's roll up the sleeves, down a cup of joe, and rock and roll.

    Gary B. Smith:


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