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When the **** Hits the Fan

Certainly, quite a few folks sold because they saw everything from a double-dip recession to a repeat of 2008 on the horizon. Some of these cats still sing the same tune with the Q's in the mid-to-high 60s.

On dips, corrections or crashes -- we dipped a bit on Tuesday and Wednesday -- you have choices to make. I see more sporadic downside between now and January, so I'll pick my opportunities and do two things.

One, buy the Q's. And, two, accumulate shares in strong companies.

Stocks like one of my favorites at the moment, Starbucks (SBUX).

Just like you have to ask yourself in a stock-specific flash crash, Is this a real move down that will sustain?, you have to ask yourself when there's downside, is a particular stock down in sympathy with the broader market? Is it weak because of macro or micro factors?

With Starbucks, you'll always have some sort of overhang. Weakness on concerns over Europe, commodity costs or a slow-to-move U.S. economy. This is all macro stuff that has nothing to do with Starbucks' business over the long haul.

During times of trauma, humans tend to look to familiar and reliable objects and/or other humans for comfort. I take the same approach with the market. When I feel like I have met my match in a dark alley, I'm going with a name like Starbucks. Chances are it will be around the next time the you-know-what hits the fan.

I anticipate plenty of these types of opportunities over the next three to six months. Don't focus on the drama and the hysteria of the 24-hour news cycle; focus on how you react as a smart investor.

At the time of publication, the author was long SBUX.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.
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