Most of the investor knows the theory, “buy low, sell high.” However, with the fear of an economic slowdown the market now moving up and down – volatility is back. The rapid downward movement makes it difficult for investors to fulfill the buy low sell high strategy. If you are not selling high, you are not freeing up cash to invest in the bargains that are becoming available in generally falling market.
However, there’s always active cash machine – dividend paying stocks become popular and powerful in down market. Those dividends get paid regardless of what direction stocks move. Less know, but important, is that dividends themselves can give you a tremendous rate of return, with no stock gains required. So even market stay flag or down for years, you can still get a decent return on your investment --- dividends. The true power and returns from dividends come from the rise over time as the companies behind those dividends grow and prosper.
In the down market, you can reinvest those dividends and accumulate more shares at cheaper prices. Or you can switch to an income strategy and take the cold, hard cash. You can rest assured that even as the market flips flops and falls, your cash will keep rolling in.