[MRM]

Mother makes some astute points, as usual, but she ignores the fact that companies are as often wrong about their own share price and make as bad of decisions as any arm chair investor. Companies buying back their own stocks might mean nothing more than they have spare cash (most do because they've been downsizing costs and not expanding for years) and don't know what else to do with their cash so it's easy to put it back in their own company. Company buy backs are an important factor to consider, but not the only factor on which to bet the farm.

My sense is that the market ha probably swung a little lower than it should, but that it has farther to go. Sub prime will probably get worse before it gets better, but it will go from bad to better than expected fasted than anyone but an insider can guess. So rather than trying to time the upswing, it's probably a good idea to buy cautiously into downturns and look for selling opportunities on days when the market is way up.

Another thought to consider, financial stocks have been battered. Some because of subprime, some because of guilt by association. But many are paying high dividends. I think it's time to start looking at battered financials, buy ones that look particularly out of favor and have high dividends.

Most investors buy the hot stock, which, by definition, means it has recently gone up. Then they sell as soon as it starts losing value. Which stocks that have had a runup inevitably do. This means most investors buy high and sell low. Buy respected stocks in out of favor sectors when they look so bad that they can't get worse and sell when they are so hot that they make the cover of Money magazine.

For that reason I sold my mutual fund in August and bought a lake cabin. The cabin had an assessed value of close to $500,000. We got it furnished (and very well furnished) for $340,000. 90 minutes from the Twin Cities on a 1200 acre lake that is 150 feet deep and has 16 feet underwater visibility. That's quite a bit less than the sellet paid for it two or three years ago. People think I'm crazy to invest in real estate with the market in the tank. I tell them that's exactly the point. Why would you buy when the market is hot? You buy when the market is in the tank and sell when it's hot.