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If you follow your online investments closely, your mood is probably aligned with the stock market, or the specific holdings you have invested in. When the market is up, the sky is blue, you’ve made some money, feel good about yourself, and everything is working as it should. The last 18 months has been a nice run for the blue chip stocks. People have realized the bigger companies have been undervalued, and, the economy has so far withstood a housing slump and high oil prices. There have been some hiccups, but the Dow has had a nice run. During this period, it has seemingly seemed “too easy” to pick a stock and see a gain.

The thing is, history tells us that the run won’t last. The economy may slow more than anticipated, housing may be in worse shape than expected, oil prices may continue to rise, a crisis may send shock through the financial markets - you know any of these things are possible, some maybe probably. Do we know exactly when? Nobody can predict when or if these things will happen exactly - but, something will that will turn things south for a lengthy period of time. So, are you prepared?

The famous four words in investing “buy low, sell high” - yet why is it, you mostly hear about great stock picks, unbelievable mutual funds, etc. when the market is running well? It seems the majority of newbie investors “hear” about how well the stock market is doing and get in, they buy into stocks or funds that are going good - in other words, they buy high. Isn’t this the opposite of common sense investing? I mean, aren’t you buying at a time when valuations are the highest? Aren’t the odds stacked against continuing high returns if you buy in at a time of optimism and gains?

Think about it, if you have an investment portfolio, and we experience a lengthy downturn, isn’t it human nature to get bummed out, check out how much money you have lost in your portfolio, and just stay away from investing for a while or even consider selling what you have in fear of losing more? Human nature is to “buy high, sell low”. This is a very hard concept to grasp as human emotion plays a vital role in our ability to invest successfully.

I know things have been going well for the last 18 months, my portfolio value is at its peak. However, I am also preparing that things are going to turn south sooner or later. Good bargains have been hard to find. But, I have put myself in a position to have plenty of cash on hand to capitalize on the market, if/when it does pull back. I am going to maintain my investment strategy, look for those established, blue chip dividend paying companies, whose valuation is brought down from investor panic. Maintaining this long-term view, is what makes a successful investor. Understanding the peaks and valleys, and being in a position to buy in a valley, when most people are running for cover.

In early-March, when the Dow dropped over 300 points in one day, followed by another triple-digit loss day, I remember reading an article that kinda put things in perspective because it asked - Do you think Warren Buffet was selling off or was he looking for good buys?

I have built a pretty solid portfolio of stocks over the last 7 years. The majority of my portfolio is established, dividend-paying companies that have solid balance sheets and years of successful growth. This strategy has worked fairly well, as the stocks have gained value and the dividends add-up. A long-term investor watches their holdings gain in value over time. You may trim some stocks, add some new ones, etc. but if you are buying long-term established companies, you expect them to grow over time and build value in your portfolio. However, this also presents a challenge.

This makes it harder for me to double-up on stocks that I already own. I hate the idea that I purchased X amount of shares of a quality stock at $43, but now, the stock price is at $60, but it still looks attractive. I have a hard time pulling the trigger and buying more of the company’s stock at the higher price. Even though I feel the stock is still attractive, knowing that I will pay substantially more than I previously did per share is a concept I have to struggle to overcome.

This is a good challenge that exists because I have been accruing more cash with which I want to invest. If I only had a set amount of cash and I invested 100% of it in stocks, the opportunity to buy more wouldn’t be there, unless I sold some holdings to acquire others. But, since I have been lucky enough to continually add cash to my investment portfolio, it is the challenge I am faced with.

I need to remember that I am not competing against my initial stock purchase, but rather investing in the company as it stands at the current price. And actually, for any of these situations, you have a track record of knowing how the company has already performed for you. You expect long-term growth stocks to do just that, grow. A buy decision shouldn’t be made because of previous price point purchases, but rather, where you feel the stock stands today.

The last few months have made it hard to find some attractive stock buys. However, the pullback the last few days have brought some stocks back down a bit. I just purchased more shares of Harley-Davidson, HOG. Harley is the most recognizable motorcycle brand there is, everyone knows what a Harley-Davidson motorcycle is, down to the sound the bike makes.

I originally purchased shares around 18 months ago when the stock was sitting around $48. It made this purchase a bit harder, as sometimes I have trouble pulling the trigger and purchasing stocks that I already own with nice gains. But, after a nice runup to over $75, the stock has come back down around the $60 mark. An attractive P/E of 15.5 or so and a 1.6% dividend make the current price still attractive. Of course I would rather be able to buy more at the $48 price, but I think at $60, HOG still is a quality, proven company that offers upside.