Buy, Buy, Buy!

The stock market has seen record losses over the last few days and many a baby boomer are clutching their nest eggs tightly with one hand, while holding a bat in the other (and they’re not afraid to use that bat). We’re here to help. Red’s 401k is down about 35% year to date so I feel your pain. Fortunately for me, my retirement’s still a couple of decades away, or at the very least by the end of Obama’s 4th term in office, so we can sit this panic out. Besides, we’re hoping this whole internet thing will take off by then and the blogeth will delivereth.

Back to the boomers. Despite the plunging market, there are plenty of good stock opportunities to take advantage of- buy low, sell high as the saying goes. The trick is to have the intestinal fortitude (ie. stones) to buy into such a market. And you also need the disposable income to do so. I don’t exactly have disposable income at the moment- actually indisposable debts (aka two children). So in place of investing real money, the virtual me is going to invest virtual dollars in some stocks and see how they fare over the next six to twelve months. And you can watch and poke fun at the virtual losses or gains.

Feel free to play along at home with real money, just don’t come after me if and when they repossess your carpet. I conjured up $50,000 of virtual money for this little experiment.

In order to pick the stocks, I tried to keep the methodology simple- traditional blue-chip companies that have very low debt (aka lots of cash on hand), good market position, and low stock prices. Fortunately, all but one of the stocks I checked are currently at 52-week lows so that made the last hurdle a non-issue. I bought a total of 1,131 shares in companies like IBM, GE, Pepsico, 3M and McDonald’s.

The two metrics I used to analyze the stocks included the debt to equity ratio and the price to earnings ratio.

I’ll track the stock prices weekly and report back the gain or loss. Hopefully through our pain or gain, we’ll help heal your psyche.

You’re welcome.