Editor's note: Lenny Dykstra will explain his deep-in-the-money calls (now 68-0 for the year) at TheStreet.com Investment Conference on Saturday, Oct. 25. Click for details.
It's a scary market out there, and that's an understatement. The
down 777 points!!!! We have not seen anything like this, and everyone is recommending that if you are out of this market, stay out. Sit on your hands. Do
go back in the water... yet. And if you do, tread carefully.
Well, I can't say that is the worst philosophy, because there are a lot of unknowns. But if you want to guarantee that you will not lose any money -- but not make any, either -- go ahead and do nothing.
However, everyone is panicking -- selling off of fear. One of my favorite quotes is from Warren Buffett. He says: "Be fearful when others are greedy and greedy when others are fearful." I don't believe that you could find a more fearful market. Commentators on television are saying this is the worst crisis in this country since World War II or the Great Depression.
With talk like that, do investors have a reason to worry? Yes. Does every stock that is being dumped deserve to be shown the door? A lot do, but not all. This means people are making mistakes. They are leaving money on the table because they are scared. They are selling good stocks at low prices. Do I understand it? Yes. However, business is business, and if other people want to give money away, I will surely be glad to take it. They are dragging down the good with the bad.
Now, I know it's tough to stay in there amid such turbulence. Buying and selling, rapid up-and-down swings in the market over the last few weeks have been the product of pure speculation and not based on anything concrete. That makes things unpredictable.
When a bailout plan is finally reached by Congress, will the Dow surge back? Could be. We should see a bounce of some sort. I don't believe that I'm telling you anything you don't already know when I say that something is seriously wrong. Yesterday was painful, and there may still be more trouble on the horizon. But remember: Not every strategy for making money is a buy-and-hold, long-term strategy.
My strategy has been a proven winner in both up and down markets. For the full season, which started in late March, I have 70 wins, 0 losses and $189,100 in winnings. Of my picks since late June, 29 have already crossed the finish line for $57,100 in the bank. The market has had some rallies, but overall it has been down, big time.
On June 23, I relaunched my newsletter,
Nails on the Numbers
, with TheStreet.com. On that date, the Dow opened at 11,843.83. On Friday, before the huge plunge yesterday, the Dow closed at 11,143.13. During that week, I grabbed a pair of wins with
. Caterpillar was in play for just one day and scored a $1,000 victory. Cameco was in play for two weeks and brought home $4,100. The week before that, I grabbed five wins, ranging from $1,000 profit to $8,100 each.
If you are smart about where you put your investment dollars, money is there to be made. If you keep in mind that my philosophy is to identify companies with solid bases and buy them and if they go down, follow them down to the bottom and catch a win on the bounce, things don't look so scary anymore. The market can't fall forever. And even if it declines regularly, there will still be up-days. Days when the stocks "bounce" a little. If I'm following the stocks down, the bounce can often mean a win.
Life is a journey, enjoy the ride!
Lenny Dykstra manages "Nails on the Numbers." Since late March, when Mr. Dykstra launched the service, he has notched $189,100 in gains. (For a free trial to "Nails on the Numbers," click here.) Mr. Dykstra writes regularly on options trades for TheStreet.com
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."