Money Show 2014 - Jimmy Mengel

Jimmy Mengel is the Editor of the Outsiders Club and an Investment Director at the Crow's Nest. His talk was called "Investing after a Crash: Buying Cheap Dividend Reinvestment Plans".

Bubbles:

• High confidence
• Lopsided Bullishness
• Overvaluation
• Hind sight blindness

The exit rule for bubbles is that you can get out if you panic before everyone else does. The bottom of a bubble is not a 4 year low, but a 10 or 15 year low according to Jim Rodgers. There is a Templeton Rule #10 that says do not panic. Do not rush to sell the next day. Sell before the crash, not after. Templeton has 16 rules of investing.

The only reason to sell a stock is because you want to buy another more attractive stock. After the 1987 crash Warren Buffett bought coke. In 2008 was the time to buy US banks. Return on Bank of America was 450% and on Citibank was 384%.

Why would you use DRIPs? There are no brokerage fees. You can accumulate more shares as the market drops. However, companies are forbidden to advertise DRIPs.

In market crashes think long term. Do not panic. Keep calm and buy stocks you have always wanted to buy.

On my other blog I am today writing about Encana Corp. (TSX-ECA, NYSE-ECA) ... continue ...

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