Optimism in Recession.

Since September 26 the Dow has lost 25%. This week the Dow dropped 17%. The S&P hasn't been this low since April 2003 and that was following the correction from the Internet bubble. Previous to that bubble we have to go back to May of 1997 to see the S&P this low. Eleven years of gains have been wiped out just like that and yet I find myself incredibly positive about the situation.

I began reading and learning about finance and the market shortly after returning from my mission in 1998. Since that time I have been of the belief that the market was overvalued. I read over and over again the statements by the bulls on wallstreet saying that the markets had changed and historical valuations no longer applied in our current market. I didn't believe it then and I don't believe it now. I thought the recovery from the internet bubble was too much too soon.

Today I feel like the market is finally properly valued. Does that mean I think we have hit the bottom, not necessarily. I do believe it is a wise time to start putting money into the market. Stocks may continue to fall, but many great companies are falling along with the rest of the market making them great buys now. I'm seeing P/E ratios under 10 for companies that have increased their earnings.

If you are worried about getting back into the market too early I would suggest investing through ING direct with a sharebuilder account. The great thing about sharebuilder accounts is that you have the option to create an investment plan that automatically buys a certain amount of your specified stocks or funds the the Tuesday of your choice (or every Tuesday should you choose to do so). The plan takes the impulsiveness out of investing, and while dollar cost averaging is not the most lucrative investment strategy it is a tried and true way of building wealth.