We all know that the goal of investing is to buy low and sell high. Or, in my case buy low and collect a high-yield dividend stream for a very long time. However, it is a reality of the stock market that most investors give into fears and sell when the market is down, and follow their greed to buy when share prices are up. It actually takes those fear-driven, money-losing investors to follow their emotions and bail out of the market to allow successful investors to generate real profits from the market. The good news is that you do not need to be an expert market timer (very few investors, if any, are) to take advantage of a down period to lock in really great future returns.

I am going to use a series of charts to illustrate how you can boost your profits from the current stock market correction, or bear market if we get to that point. At the top of your mind, you must understand that the stock market has always recovered from corrections and bear markets. Over the last 40 years, there have been five serious bear markets and probably close to 20 market corrections of at least 10%. Even with all of those down periods in the market, the S&P 500 is 2000% higher than it was 40 years ago. Investors who have a strategy to buy when the market is down and everyone else is bailing out can increase their returns to several times the average. The problem is deciding when to jump on those falling share prices to actually practice the art of buying low. It is not a pleasant feeling to buy what looks like a great deal and then see share prices fall another 10% or more. My purpose here is to tell you that it doesn’t really matter if you buy and the shares continue to drop, or if you get your timing right and catch them on the way back up. Let’s take a look at a series of the same chart covering the S&P 500 through the last, 2008-2009 bear market.

The stock market as tracked by the S&P 500 hit a peak in October 2007. By July 2008, the index had lost 21% (that’s bear market territory) and a late summer rally clawed back about 6% of that loss. In this hypothetical situation, you decided it was time to invest, and bought some shares in September 2008.