By Steve McDonald
For months, my colleagues and I at ETR's sister newsletter, Investor's Daily Edge, have been pounding the table about how this market is a stock picker's dream. We have said things like, "Millionaires are made at this point in the market cycle," "Stocks are really cheap," and "Build a bulletproof portfolio now." But most people can only hear the doom and gloom news, and it always ends up costing them money.
The market is almost 7,000 points below its previous high, even after a huge move in the last month. This is a buy signal... not a reason to stay out. But most will stay on the sidelines and wait for stocks to become overpriced before they buy again.
In my last ETR article, I said that you can lower your risk in this market by giving it time. Now, here's another suggestion...
Average in, rather than dumping in all your money at once. Buy about one-quarter to one-third of what your usual position size is, and buy on the dips - and there will be dips in the next three to five years.
If you want to add a nice kicker to this plan, buy companies with good dividends. That could add 5 to 7 percent to your annual return. That's how cheap stocks are right now. Companies that usually have dividends of 1 to 3 percent are paying 5 to 7 percent.
This is a 100-year buying opportunity. The only requirement is that you must be willing to stay the course and treat selling dips as buying opportunities. You have your pick of the best companies in the world right now at bargain basement prices.
[Ed. Note: Get the scoop on more emerging investment opportunities from Steve McDonald in Investor's Daily Edge, ETR's sister publication. Sign up for free right here.