“This is the second decline of this year of 5 percent or more and two out of every time we had more than one decline in a year, the second decline was sharper than the first,” Stovall said. The S&P 500 dipped to 2,710 last week, a 7.8 percent decline from its all-time high in late September. In February, the S&P was down nearly 12 percent at its low. “There could be a test of the lows.

Successful long term investors stay in the market through its ups and downs. And successful long term investors are sure to buy at the low points. The point of value investing is based largely in assessment of intrinsic stock value. And, the intrinsic value of an investment is based on its forward-looking earnings potential, not its lowest price as investors pile out of the market to avoid more losses.

How Long Should You Wait?

The market keeps rising and falling. This sort of volatility tells us that many investors are getting out because they think that the bull market has run its course and is ready to crash. And, many investors think the market still has room to run so they are buying on the down-swings. Seeking Alpha writes about whether or not this is the start of a bear market.

This is still a bull market.

The bull market doesn’t have a lot of room left, probably 1 more year.

Leading economic indicators continue to improve, which is long term bullish for the stock market & economy.

The Freight Transportation Services Index is still trending higher. Historically, this leading indicator tanked or swung sideways for many years before bear markets and recessions began.

That having been said, if you believe what these folks are saying, stay in the market a little longer and don’t start looking to see bargains until sometime in 2019. But, is this the only opinion?

Forbes writes about what to do after a stock market crash, so they are thinking this could happen in the near future. They suggest that you consider what will be good long term investments and then pick up bargains when the market tanks.

Think about the products and services you spend your money on. They may be a place to start looking for potential investments. What are the trends today that will continue for years? For example, are health care companies something that could have strong sales for years to come? Perhaps they are worthy of further investment research. For instance, are they undervalued or overvalued? What is their earnings growth rate? Is it sustainable? Is it steady? What is their relative strength compared to their competitors? Are insiders buying?

This is the long term, value investor, intrinsic value approach that has served many so well over the years. If you believe what Seeking Alpha has to say, you have a few more months until there will be bargains available and if you believe Forbes, you should start thinking about long term investments to make when the big correction finally happens.

How Long into the Selloff Should You Wait to Pick Up Bargains? PPT

U.S. stocks tumbled to their lowest levels since a late August rout, as investors punished the year’s biggest winners and losers alike in a search for profits in the market’s downturn.

Monday’s broad declines signaled further volatility could be ahead in sectors beyond energy and raw materials, which investors have hammered as commodity prices have tumbled.

“The concerns that triggered the drop in stock prices in August are still with us,” said Kate Warne, investment strategist at Edward Jones. Investors are “selling the winners,” she said. “When investors get nervous about the overall market they sell everything and then figure out what things they shouldn’t have sold.”

The market is correcting and may correct further. Taking a rational approach to deciding which stocks to sell makes a lot more sense that panicking and selling everything. That being the case where to you look for keepers and what do you sell as fast as you can?

Anything Related to China

The Chinese economy is cooling off, rapidly. There are certainly winners among China stock ADRs but as the market panics good stocks may be punished along with bad ones. What is the time horizon for getting out of and then back into Chinese stocks? Bloomberg writes about Chinese stocks rebounding. This refers to the Chinese stock market in Shanghai but will be watched for cues by US ADR investors.

The nation had cleared up 69 percent of non-compliant margin lending accounts as of Sept. 23, China Securities Regulatory Commission spokesman Zhang Xiaojun said at a briefing on Friday. A rapid increase in leverage fueled the Shanghai Composite Index’s doubling from November through mid-June, and deepened the rout on the way down as traders unwound positions amid a government crackdown on shadow financing.

“China needs one more month or so to fully squeeze out non-brokerage margin debt, so it’s highly likely this will be done by the end of October,” Jupiter Zheng, a Hong Kong-based analyst at Bocom International, said in an interview. “The stock market will then recover from November as market sentiment improves.”

For short term swing traders this may be good news. Get rid of Chinese stocks if you have not already and buy when you believe that the bottom has been reached. Then cash in when the market rebounds. The problem is believing what you hear from Chinese regulators who are in the pocket of the Communist Party bosses. China has a  lot to do to get its economic house in order and in deciding which stocks to sell and avoid for the indefinite future Chinese stocks may be at the top of the list.

Oil Stocks

The problem with oil stocks is that there is too much supply for current world demand. Even if the Saudis cut back on production other OPEC and non OPEC suppliers will rush in to sell their oil. There is a temptation to get back into oil stocks as many have bottomed out. The problem is that the bottom for oil may last for a long time. Oil stocks are still among those to sell unless you want to wait a long, long time. Better to look for stocks that benefit from cheap oil.

Airlines

Investor Place suggests American Airlines (AAL) as a buy. The point being that cheap fuel prices are a boon for airline stocks.

Falling oil prices might spell trouble for oil stocks this year, but it’s a dream come true for airline stocks like American Airlines (AAL).

In fact, Deutsche Bank pointed to lower energy prices as the reason it upgraded AAL stock and sector-mate Delta Airlines (DAL) in September.

And if airlines prosper so will those who make the airplanes, such as Boeing.

Deciding Which Stocks to Sell PPT