Bargain stocks, a good deal?

Diving stocks are hugely tempting. Despite intense speculation and high hopes of locking in tax benefits. But watch out. Bargain stocks might not be the good deal they seem.

As put by CNBC.com, “You know when Warren Buffett starts buying stocks that we are at least within a 500-mile radius of the bottom”.

When a company is going through bankruptcy its shareholders are the last people to get paid. There is also a chance you might not get paid at all, meaning the stock you hold for that company could be completely worthless. I say “could be” because there is a chance that some pre-existing shareholders will receive some payment, but it’s a major gamble.

Friends, a smarter investment in these tumultuous times could simply be taking better care of what ever new money you have coming in. For instance a reallocation program that adjusts contributions to under-funded areas in your portfolio can keep you from locking yourself in to future losses. Talk to your financial advisor or your employer’s benefits manager about setting up a program that reallocates your new money.

And another thing: diversify. With the risks of having all your eggs placed in one basket, diversification should be among your top investment priorities. I’ve covered a few strategies that lend to automatic diversification. Click here to learn about a common way to instantly diversify your portfolio.

Popularity: 23% [?]

More on this topic (What's this?)
Seven dividend aristocrats that Buffett owns (Dividend Growth Investor, 2/24/10)
Warren Buffett & Berkshire Hathaway's Annual Letter (market folly, 3/1/10)
Buffett Gets a Bullseye (Buying Value, 3/2/10)
Read more on Warren Buffett at Wikinvest

Technorati Tags: ,

If you enjoyed this post, make sure you subscribe to my RSS feed!

Tags: ,

This entry was posted on Friday, October 24, 2008 at 8:11 am and is filed under Investing Basics, Stock Market Investing, Stock Watch. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Bargain stocks, a good deal?”

  1. Don’t push the panic button (yet!) | Invesmint Says:

    November 3rd, 2008 at 7:05 pm

    [...] I mentioned in my post, Bargain stocks, a good deal, one of the things you can do right now is to take care of new money coming in. This gives you an [...]

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

« Back to text comment