Talk about the bulls getting run over.
The Dow Jones Industrial Average plunged 665 points Friday, while other stock indexes fell sharply as bond yields spiked. Traders pinned the blame on good news on the economy potentially being viewed as bad news for investors. The U.S. added 200,000 jobs to payrolls in January, above forecasts, and yearly wage gains rose at the fastest pace since the Great Recession of 2008-2009. With faster wage gains comes inflation, and perhaps a faster pace of interest rate hikes by the Federal Reserve.
Since investors haven't seen these types of down days in some time, so we felt catching up with the Action Alerts Plus research team would be helpful. Here are some things investors should keep in mind amidst Friday's market plunge:
Build a Watch-List of Stocks
Let's be honest, you have probably missed big moves in top names such as Home Depot (HD) and Netflix (NFLX) . These are the best in class names that are now suddenly cheaper than a day earlier. Put them on a watch-list and get ready to pull the trigger.
Listen, Friday's market nosedive is not late 2008/early 2009 all over again. Companies are sitting on records amount of cash, dividends are rising, stock buybacks continue and mergers and acquisitions remain hot. Above all else, there are no signs of an impending recession.
Don't try to be a hero and buy up tons of stocks all at once. Slowly scale into positions so you are somewhat protected should markets continue to fall. Set reasonable stop-losses, too.
TheStreet's newsroom discusses the market plunge and what is on tap in the coming week.
Inside Friday's Jaw-Dropping Market Selloff
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- 9 Tech Stocks That Got Hit the Hardest on Friday's Selloff
- In Market Selloffs, Remember the Difference Between 'Cheap' and 'Lower'
- Remember Even Great Stocks Get Hammered in a Market Rout
- Google Sells Off Following Mixed Earnings: 3 Key Takeaways