Forget the fact that the broad-based Samp;P 500 tripled from its March 2009 lows. All that matters right now to some investors is that the Samp;P 500 has lost about 7% of its value in a matter of a month, and traders are terrified.
Having watched CNBC at 3 am (what can I say -- Im a night owl) this past week, most of the programming early in the week was devoted to whether or not the market would continue plunging. And why did CNBC likely take this route with its programming? The answer is that many traders allow their emotions to get the better of them. In other words, the best way to invest money for some traders is to simply hop aboard the latest news-driven story and hang on for dear life until the next one comes along.
Though this strategy of trying to time the market based on news events has worked for a few years, given that there have been no sizable corrections, its not a successful long-term strategy, as recessions and stock market contractions are a natural and unpredictable component of any economic cycle.
This is the best way to invest money in a falling market
So this leaves investors like you and I, who arent trying to time the market and swipe a $0.10 gain on a stock, wondering: Whats the best way to invest money when the stock market is plunging?
I believe the answer to that question is actually easier than you might think: turn to high-quality dividend stocks.