Don’t Be a Wall Flower Investor

The stock market peaked recently, and there is talk about a correction. In September 2021, the market hit a high, followed by a month-long decline into October. This decline represented a 5.2% drop in the stock market in a single month—that is pretty brutal as far as one-month corrections go. I know a lot of pundits have been calling for a 10%-20% correction in the market, so people are worried there is another 5%-10% left to go.I have spoken with several individuals hoarding cash on the sidelines since December 2019 because they are waiting for the ‘inevitable’ market crash. Even after the current 5% dip, the stock market has increased by 15% this year and 70.2% since March 2020. Not only has their decision to sit in cash cost them in potential gains, but it has also cost them in purchasing power on account of higher-than-usual inflation.Over the past few months, I have read several books and numerous articles written by (and about) Peter Lynch and Warren Buffet—two of the most successful investors of our lifetimes. One of the fascinating things that I have found is that they have been fully invested right before significant market crashes. On top of that, Warren Buffet is known to accumulate cash hoards which he deploys during economic crises.One of the things that I love about Lynch and Buffet is their long view on investing. They invest in wonderful companies and hold onto them during market downturns, twists, corrections, and increases. They will invest more money into undervalued companies during market corrections from time to time—this is what I try to do.I have been watching the stock market closely over the past month—I haven’t sensed enough fear in the markets to put all my chips on the table. I believe the market has offered some discounts on good companies, but those discounts aren’t yet good enough for me to change strategies. So, as you will see in your portfolio, I have maintained a steady course during this past month.When there is sufficient fear in the market, picture me in my office doing a happy dance as I buy great companies at a significant discount. In the meantime, I will continue to invest prudently.