What to do now? (Buy quality on the dips!)

I heard from a friend with some money in the market. They said they had to make some decisions soon about what to do with their investments. I wish I could tell them but I can't. That decision is theirs to make. But, I can share how I approach this quandary that faces every investor now and then.

At this point, one can either sell and accept the loss or stay the course and remain invested. With individual stocks, selling can be the right thing to do. I once foolishly bought some Yellow Pages stock. I wisely bit the bullet, sold the stock, took the loss and moved on. Yellow Pages never did recover.

It is far more uncommon for the market to crash and burn and not rise from the ashes reborn within a few months or years at most. In fact, depending upon whom you believe, even the 1929 stock market crash offered wise investors the rare opportunity to buy stocks at bargain-basement prices.

Mark Hulbert, writing for "The New York Times," suggested that an investor could have fully recovered from the 1929 crash in four-and-one-half years. Here's a link to the full article, 1929 Stock Market Recovery, in Zacks.

I've been in the market off and on since I was a boy. I've only dodged the bullet twice in my life. During every other decline I've been caught. Trapped might be a better word. I held on, accepted the volatility. The market goes up and down. Period.

How long it has taken the stock market to recover in the past.

If you are convinced our world of finance is coming to an end, bale. If not, stay invested and buy more stock in good, solid companies on the dips.

Stock market crashes are not one-time unique events. Although the media always reports these as one-time horrors. Google it. You'll learn that retirees are regularly losing everything in the market.

I'm a retiree. I'm in the market. Why am I in the market? I need the income and the market is answer.

So what has happened to me since the crash. I've lost money. Lot's of money. But my portfolio is better than ever. I took this as an opportunity to rejig my holdings. My income from dividends is up some 60% since the crash. If some of my holdings cut the dividend, c'est la vie. I can handle it.

And,  although I don't recommend it, I've done a little day trading and I'm up in the four figures. Retirees have time on their hands. We are a perfect group for doing a little successful day trading.

I may not be able to tell my friend what to do. Only my friend knows what keeps her awake at night. For me, it's locking in losses. I'm an optimist. The market goes up and down. I like to dwell on the ups.

At the moment, and I know this is hard to believe from the stuff one reads and hears, but many of us are making money in the market at the moment. Let me end this by sharing a diagram charting of my portfolios recent performance. My portfolio is the purple line with the big dots. Take note: a retiree's portfolio is NOT the market. (For a peek at stocks I like, see my post before this one.)