What do you make of the falling stock market? Rotten cherries? Or cherry cobbler?

I heard through the grapevine that Oregon's cherry crop this year was ruined by late rains. It seems that when cherries get too much water, they pop, leaving an ugly, unappealing, and apparently unsellable cherry. The news report I heard said that a local orchard was letting the public come pick their cherries for free. "Hmmmm", I thought to myself, "how bad could a bad cherry really be?" So my family and I went out to pick some of those cherries.

In an hour, we picked ten pounds. I was surprised to find that:

Not all the cherries were ruined.

  • The "ruined" cherries were larger and sweeter than their fair-skinned siblings.
  • No one was in the orchard, so there was literally a ton of low hanging fruit.
  • I gorged myself on cherries, then sorted the remainder into two piles: pretty, and ugly. I set the pretty ones aside to ripen for later, and my wife used the ugly ones to bake the best cobbler I have ever tasted.

Before you begin to think I'm some kind of financial-advisor-turned-fruit-fanatic, bear with me: there's a morsel of wisdom here.

As I sifted through the headlines today, I read "Double-Dip Recession Fear Behind Wall Street Plunge" trumpeted from the New Zealand Herald as the US stock market sank by about 5%. I also saw another story a colleague forwarded about how BNY Mellon (a bank, not a fruit farm) is actually charging its largest customers who hold excessive levels of cash at its bank. There is so much panic that people are selling. They are piling up cash so fast that the banks don't know what to do with it all. People are unloading their "ruined" stocks and running for cover until the financial storm has passed.

Did the stock market really rot? Or become sweeter?

Many of the stocks that impatient investors are dumping will pay dividends, and others may have bright prospects in the future. I believe the stock market become sweeter and more appealing as prices go lower.

With a little luck stock prices will continue to decline.

Yep, you heard me right: I said "go down."

This gives young doctors a chance to make more long term investments at lower prices, and it allows you to rebalance your portfolio by buying those beaten down equities as you sell bonds which have appreciated. Neither of these two moves feel very good, but if you chose to pick your way through the 2008-2009 market decline, you now know that it's best to set aside your fear and sink your teeth into bargains, gorging on the abundance other investors have left behind.