Stock Picker's Corner: The Accumulate Strategy

Chief Stock Picker Bill Patalon's easy checklist for success ...

Every investor knows the investing maxim of “Buy Low, Sell High.”

But very few people actually do it.

They know this maxim logically … intellectually. But they act emotionally.

Bull markets tend to last about four years. But the average correction (a decline of 10% to 19%) lasts 138 days. And the average bear market (20% or more) persists for less than 18 months. 

In short, we know that a bear market today is a table-setter for a bull market tomorrow.

If you’re a long-term investor, buying the shares of the companies with the best storylines during down stretches will magnify your wealth.

Let’s say the S&P 500 takes a 10% spill (a correction) or a 20% freefall (a bear market or even a crash). If the historic average annualized average return for the S&P 500 is 10.26% from 1957 through 2023, doesn’t it make sense to view any spill or freefall as a “Buy Low” opportunity?

That’s the point in time where that “Buy Low” opportunity that we all know to be correct is being handed to us: Prices (valuations) will be lower, making those great companies cheaper to snag.

And that leads us to a checklist for Chief Stock Picker Bill Patalon’s “Accumulate” strategy:

✅Look at the stocks you own now: Which ones would you like to own more of? Look to “Accumulate” additional shares on any pullbacks, or as you get more cash.

✅Look at stocks you don’t own now – but would like to. Create a “foundational stake” now – and then shift into “Accumulate” mode by adding more shares.

✅Or create a “Watch List” (like this one) and wait for a pullback to make that first purchase.

Once you’ve done that: Go long.

Stay in the market and let time be your ally.

Automate Your Accumulate Strategy

In addition to buying on pullbacks, you can also automate your “Accumulate” strategy through buying shares on a weekly or monthly basis.

For example, if your investing budget is $500, you could buy $250 worth of shares at the start of the month and another $250 worth of shares at the end of the month. You can also just buy $500 worth of shares at the start, middle or end of the month.

This encourages regular investing, which is how you build wealth over time.

The following popular brokerage operators all offer reoccurring investment plans:

🔵Charles Schwab

🔵Fidelity Investments

🔵Robinhood

🔵E-Trade

🔵And Vanguard.

You can also also use a site like NerdWallet to see comparisons between different brokerage accounts.

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