Do You Dare Buy Stocks?

Naturally, someone must be to blame. Ah, Alan Greenspan! Who else? The difference between a god and a goat is 2,000 points on the Dow. But it's not clear that the Fed's monetary magic failed. The first quarter looks pretty good, consumer spending picked up and home sales are strong. For a quick insurance policy, Congress might try a cut in tax withholding for the middle class. (The rich are doing OK. After all, they're rich.) Those cuts should come now, or there's no point.

Buy now: Enough of this dithering, let's get to the real question. Should you buy stocks now? "Yes," says economist Irwin Kellner of Hofstra University. "Every time the Fed has cut rates by this much this quickly, stocks have gone up." What's more, further rate cuts lie ahead--maybe as much as one percentage point. Investors have panicked and politicians are making speeches. What else are you waiting for?

Back to Fred Schwed. He wrote that he never knew anyone who followed his system because you have to buy stocks when they're universally despised. But think about it: someone gets the stocks that the suckers sell.

If following Fred would leave you pale, yet you're holding a hot stash of cash, consider investing gradually--a bit per month, over the next few months. Assuming that stocks bottom and rise within that span of time, you'd get an average price without having to worry where the low point is.

Steady investors with 401(k)s should keep plugging away. Since World War II, stocks have averaged 12.7 percent a year. You got higher returns since 1990 (14.5 percent) and might get subpar returns in the decade ahead. But long-term, well-diversified buyers will do fine.

A harder question is which stocks to buy when you're looking for something other than mutual funds. Qubes (ticker symbol: QQQ) are the Nasdaq speculation of choice. A Qube trades like any other stock, but it's not a separate company. Instead, it tracks the index price of Nasdaq's top 100 stocks. That makes it the easiest way of betting on a rebound. Trading volume is running at more than 95 million shares a day--a huge increase in recent months.