“Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.” - Warren Buffett

This is the perfect time to reaffirm Mr. Buffett’s advice as consumer confidence has hit a 16-year low, which is the fifth lowest on record. Thus, everyone is fearful and it’s a good time to start planning on how to get back in the market.

This strategy is very hard to implement, not because it is intellectually rigorous, but because it requires us to ignore internal wiring that has been developed over thousands of years. We tend to get afraid when everyone else is afraid. It helped us when we lived in small tribes by focusing the group on a predator that may only have been seen by one person in the tribe. Now, it only helps us to think irrationally in the stock market, as we start to get bombarded by warnings from friends, family, media, etc. By the time the bottom arrives everyone is in a panic and no one wants to be in the market. We fear the total loss of our future.

This fear has one problem…it is based on a highly unlikely event. The total loss scenario has really only happened once, with the Great Depression, and even then it did eventually recover. There is a far greater risk of not having enough to retire on, than losing all your money in cataclysmic stock market event. Plus, if the stock market really does implode nothing will be safe. The dollar would be worthless. Even U.S. government treasuries would take a huge hit.

So, develop a plan and do not be afraid to start placing small investments in the market, as it goes down. This is a must, as it is impossible to predict the exact bottom, but not impossible to predict a bottom is near.

As an aside remember that consumer confidence numbers are usually ahead of the actual economy, so this measurement does not signal a bottom. However, it does signal a bottom in the near future. This is why you need to start planning your entry strategy. You do not want to be deciding what to buy when the buying opportunity comes or you might miss the chance.

“One doesn’t discover new lands without consenting to lose sight of the shore for a very long time.” - Andre Gide