Transcripts

"Money File"-Building A Dream In A Nightmare Economy

SUSIE GHARIB: In tonight's money file, instead of worrying about the market, now could be the time to build your dream portfolio. Here's Chuck Jaffe, senior columnist at "Marketwatch."

CHUCK JAFFE, SENIOR COLUMNIST, MARKETWATCH: There was a moment, shortly before the Fed made its big rate cut and the stock market sighed with relief, when it looked like investors were about to reach the point of maximum pessimism. That's beyond gloom and doom. It's past the 16-year low on the University of Michigan/Reuters consumer confidence index or the one-year of dark, pessimistic thoughts revealed by "Investors Business Daily's" economic optimism index.

Maximum pessimism is an idea advanced by legendary investor Sir John Templeton, who said it was the point where all of the buyers have left the market and there are only sellers left. It's a theoretical idea, of course, because that is precisely when Sir John would swoop in for bargains. If the market has you down, you could be late to the pity party, recognizing trouble only after it had started, in which case any recovery - - and many observers see a rebound coming -- will be halfway over before you feel good about the market again.

That's a great reason to hang on. But hanging on doesn't mean sitting idly by. In conditions this bad, try to make a list of securities that would be in your ideal portfolio. Between stocks that have been beaten up and some great mutual funds that have reopened to new investors, this is actually a time when you might be able to build that ideal portfolio on the cheap. Building that portfolio, on sale now, will help you live out the adage that investors make money during bear markets. They just don't realize it until later. I'm Chuck Jaffe.