NEW YORK ( TheStreet) -- This tends to spook people. The thought of a stock market crash or meaningful correction. More than anything, it's the volatility that scares investors.I can understand that you might fear crashes, corrections and volatility if you need your money now. The last thing somebody nearing or in retirement or ready to tap capital for an important expenditure wants to deal with are wild market gyrations and extended downside. But, if you're a couple of years (slightly more, slightly less) away from something big, you probably should have your portfolio structured defensively anyway. Earlier this year, when I wanted to keep a pool of money liquid, I took profits in everything (and a couple of losses), leaving only three positions intact -- the somewhat defensive, but hardly sleepy American Electric Power ( AEP) and Becton, Dickinson and Company ( BDX) as well as one of my favorite speculative plays, Pandora ( P). In that account, I was fine with a 13% stock/87% cash position. Now, as I've made the decision to take that cash and reinvest it in equities, I'm just waiting for the other shoe to drop. I'm getting impatient. That's the biggest thing I have to work on as an investor -- being more patient. For instance, right now I'm salivating at Starbucks ( SBUX) under $50 a share. The stock is up about 24% over the last year, but down roughly 15% and 3% over the last six months and past five days, respectively. Part of me wants to rush into SBUX today. After all, it's a long-term proposition with the type of management team I can get behind. As I'm fond of saying, Starbucks rolls like a tech company. It's ahead of most meaningful curves, particularly mobile. And CEO Howard Schultz continues to inspire confidence in recent media appearances. That said, I think I should hold back. I want to use my gauge of market irrationality/investor fear to my advantage. We're in a great rally right now. From point A to point B, we've seen nothing but upside. Consider the PowerShares QQQ ETF ( QQQ).
If you bought any of those valleys over the last two years, you're better off for it. As usual, the fear and, to a lesser extent, actual unfolding of one crisis or another drove the broad market down on practically every dip. There's nothing quite like looking back, knowing that you stayed calm and purchased equities in the face of the hysteria of the day. Really, it's a simple formula, buy strong companies on the dip. And couple that with a few index and/or sector plays you believe in. For me, it was media stocks (e.g., Time Warner ( TWX) and Madison Square Garden ( MSG)) toward the end of 2011, beginning of 2012. Today, I focus on names such as Starbucks. Great brands with innovative leadership, plenty of room to grow and a loyal cult of habit-formed, lifestyle, mobile and/or tech-savvy consumers. Lululemon ( LULU) is nearly as strong as Starbucks from a brand standpoint. In some respects, it's "the next Starbucks." While I might not be the biggest Apple ( AAPL) bull in a post-Steve Jobs world, it, almost better than any other stock, illustrates my point perfectly. QQQ data by YCharts
Over time, nothing matters aside from buying strong companies when the world appears to be coming apart at the seams. Certainly, you'll miss on a few buys and pass up on what would have been a winner or three, but, time and time again, the strategy wins out. You don't need technical analysis and too-cool-for-school quantitative metrics to spot fantastic stories such as Apple, Time Warner, MSG, Starbucks and Lululemon. You don't need a market crash either. If you feel like you've done your homework on the stocks that excite you and you're in for the long haul (meaning many years, not months) there's probably no time like the present to buy. Personally, I'm waiting on and hoping for massive multi-day drops across the major indices. The type of thing that sends the 24-hour news cycle into a tizzy.