Five Funds to Buy in a Market Crash

BOSTON - Every American should be prepared for a Wall Street crash.

No, I'm not saying one is guaranteed, or even likely -- although the events of the last couple of weeks make you wonder.

What I'm saying is that you need to be prepared in case one happens. You need to know how much investment money you can get your hands on quickly, and what you're going to buy in a sudden fire sale.

Why?

Because if you are a long-term investor, a stock market slump is a heaven-sent opportunity to find some bargains. Obvious, but true: You are far better off buying stocks when they're cheap than when they're expensive. Most Americans are kicking themselves for getting out of the market back in 2001 and 2002, when they should have been getting in.

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The lessons of history are unambiguous. Those who have invested in the stock market when it has collapsed and have then held on for the long term have ended up doing extraordinarily well.

As the old Wall Street saying has it: The time to buy is when there's blood on the streets.

Naturally, this is a lot easier said than done. If the Dow plunges 3,000 points, that's when it's hardest to steel yourself to jump in. Most people, by definition, are rushing to get out. And, of course, that's when everyone on Wall Street will be screaming and predicting the Dow will drop another 3,000.