The Ultimate Money Guide for Bubbles, Busts, Recession, and Depression

Chapter 14. WHEN TO BUY THE BEST BARGAINS OF THE CENTURY

In the wake of a major bust, recession, or depression, the most important event will come when we finally hit rock bottom—your opportunity to build the kind of wealth that endures for generations.

Imagine buying a company like General Electric for what Thomas Edison's company cost soon after he invented the light bulb; or a stock like Microsoft for a few dollars per share; or the most solid, highest-paying dividend stock for as little as a third of its book value!

At the bottom of the next major decline, bargain opportunities like these will be so plentiful, your greatest challenge will be to refrain from buying too many too soon. But don't fret. It will not be a one-day event. So you won't have to rush out and do all your buying at once. Different stocks, sectors, markets, regions, and countries will hit bottom at different times, some earlier than the Dow, others not until weeks or months later.

One reason stocks will be so cheap is because the decline in corporate earnings is so deep; and most investors will see that clearly. What they will not see is that their own irrational fears and outright panic are part of the reason share prices fall so sharply, usually far below their true value.

That alone multiplies your opportunity: You can profit from a stock rebound that comes with the return of investor confidence, and you can profit still more with an actual recovery in earnings.

So even if you get nothing else out of this book, ...