The Question Of The Hour: Should You Buy Now?

Over the last three weeks, the Dow Jones (DJIA) has plummeted more than 770 points - or over 7% - due to fears over the state of the economy. Today will likely mark the first day in 3 months that the Dow has closed below the 10,000 mark, leading to the Big Question: Is now the time to buy?

Analysts have been talking about a correction for some time. Most have predicted a 5-10% downward movement, while a few have suggested even higher amounts (anywhere from 25-50%). The downturn we're experiencing now, over 7% and counting, appears to be the correction that has been suspected. If that is the case, whether or not to buy really depends on your perception of the market's future.

Most analysts, including myself, are optimistic about the market's value through 2010. The majority opinion (but by no means the consensus) appears to be that the Dow Jones will end 2010 higher than it started - but by how much, no one is sure. One thing is sure, though; if you believe it will increase in value, then now is a good time to get in if you haven't already.

Of course, there is always the chance that the correction is going to run deeper than predicted. If that is the case, the question becomes whether or not you can afford to wait a bit to see what the market does. I think you can. I think that a few weeks spent eyeing the market will not harm your potential for gain. There will still be plenty of value to be had, and plenty of undervalued stocks to pick up and ride for the long term.

In fact, I believe a wait-and-see approach is more prudent than jumping straight in. But, if you're getting restless and want to dive in, make sure to search for undervalued stocks that are due for fair valuation. Financial stocks are still depressed and have potential; just keep an eye for bonus fallout from Capitol Hill.

Either way, a falling market is not necessarily a bad thing for an investor. As with comedy, it's all about timing.