While it may be premature to declare the bear market dead and optimistic to hope the pictured bull lived to fight another day, there is no doubt that a bull market in stocks will return. Indexes will one day hit new highs and the current times will likely be viewed as the greatest buying opportunity of a generation.

It seems unbelievable that a week ago with the S&P 500 at 1,099 and the Dow at 10,325 that I was speculating that prices could go this low. What a week!

Yes prices could still go lower. However, if like me you are averaging into this decline then you should actually be rooting for prices to go lower in the short term, so you can buy at even lower prices. At times like this wealth is transferred from weak to strong hands. Those who are selling are weak, your decision is whether you want to be strong.

I have started averaging into a leveraged bull fund. While that may no be a long term investment I only view two outcomes as possible.

1. We have hit a short term market bottom and will sell my initial purchase(s) in the fund for a short term profit. Unfortunately I have plenty of capital losses to offset against any gains
2. We go lower and I get to buy more at even better prices and then wait for longer to profit.

Of the two options I prefer option two, as it allows me to buy more at better prices and is less complicated as it involves less short term decisions. As I said in the earlier post; Investing is simple, ignore the noise and buy when things are cheap.

If you are not buying are you burying your head in the sand, out of cash or waiting for a mythical bell to ring to mark the bottom? As I said here, even if it takes nine years for the market to hit new highs then you’ll still get a CAGR (compounded annual growth rate) of 14% via ULPIX.

While is it impossible to accurately time a share market top or bottom it is possible to buy at around the bottom. Dollar cost averaging from the current low levels almost guarantees you will buy near the bottom and will come out the other side a winner. Feel free to use or download this spreadsheet to test this concept. You’ll see that if you believe the market will someday be higher then dollar cost averaging won’t lose you money. Click “Full Screen View” if you want to play around with this spreadsheet.

NOTE: The Ultra Bull Fund is a leverage fund. If aims to track the market by a factor of 2. So if the S&P 500 falls another 20% it will fall 40%.

Related posts:

1. TV is Dead Long Live the Internet
2. Fusion Investing Fund Sells Ultra Bull Fund
3. The Rebirth of Long Term Buy Hold
4. The S&P 500 Index
5. Investing is Simple – Start Buying