Dollar cost averaging into stocks during a recession

What a blessing that we have gone through this bear market! What did you say? A bear market a blessing? Absolutely! This morning I watched an excellent video this morning by CNN Money featuring Warren Buffet (http://money.cnn.com/video/news/2009/05/07/news.buffett.050709.cnnmoney). In a nutshell he basically said that this bear market is an excellent time to buy. For an investor we should be hoping for many ups and downs, because during the dips it allows us to buy more shares at a lower price. If the market we're to remain on a constant flat line over an extended period of time then we'd have zero to a small gain (depending on dividends).

Take myself for example...on Monday the dow was at about 8100. I said to myself, "I bet for the year in my 401k that I'm close to even or ahead % wise for the year to date." Remind you that on Jan 1 the DOW was at 8776 and down 4.41% for the year. Even despite this fact I checked my year to date 401k and I was up 0.73% for the year. My asset allocation isn't anything extrodinary either with 10% bonds index, 45% S&P index, 15% small cap index, 15% international index, 5% company stock, and 10% value index. Even though stocks were down for the year I managed to eack out a gain. Think about if the bottom to the trough had been deeper and the market on Monday would have been at 8100? The gains would have been even more! But a lot of investors are emotional during the bottom and don't trust dollar cost averaging. They say...this time its different. The market is never going to recover from this.

Point is this..."During a recession or depression continue to dollar cost average and you'll be a lot better off then the average emotional investor."