The reaction of the market yesterday over the interest rate cut of 0.25 was exactly what I expected. Pure panic. It seems people often forget to look toward the future in times like these. My experience has shown me that you can really find some great bargains through all the chaos.
From the NY Times, March 8, 2000:
In one of the more drastic stock swoons in memory for a blue chip company, shares of Procter & Gamble tumbled nearly 31 percent yesterday, dragging the Dow Jones industrial average and other makers of consumer products down with it, after the company warned that it would not meet earnings estimates for its third quarter.
Procter & Gamble lost 50% of its value between January 14 and March 10 of 2000. The company had missed earnings badly and they set about a six year reorganization plan. What would have happened if you had bought shares at this bottom?
Your shares would have almost tripled in value, up 275%, from a low of $26.87 to $73.84 at the close of business today. PG never did cut their dividend during all the chaos surrounding them. The dividend has continued to grow at a steady pace from $0.64 to $1.40.
Stay calm in this mad world and seek out bargains.