Of course, no one wants to buy in at a market top. In a real bear market such as we saw in late 2008, few if any stocks avoid taking on water entirely. It can be months or even years before all the damage is undone. And the worse the fallout on the broad economy, the more likely even the most careful stock picker will be forced to unload selections where the underlying business unexpectedly takes on water.
A careful stock picker, however, will be able to do something those who’ve bailed out won’t. That’s to maintain investment income and thereby avoid eating into principal. And when the recovery inevitably does come, their capital will recover with it.
The first key to successful investing late in a bull market, then, is wise stock selection. Mine always starts with the five-point Quality Grade system I highlight in every issue of Conrad’s Utility Investor:
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