Deep Dive: This might be the time when you can finally get quality stocks on sale

Some investors always think stock prices are too high. They’re the ones on the sidelines making a few basis points a year from a savings account.

What might get them to change their minds? One thing we know for certain is that prices for many stocks are considerably lower than they were when two benchmark indexes hit their all-time closing highs last month.

At the end of trading Monday, the Dow Jones Industrial Average DJIA, +0.16%  and the S&P 500 Index SPX, +0.26%  were each down 8% from record closing highs Jan. 26.

For some investors, the right “entry point” kept slipping further away as the market rose, almost endlessly, since the bull market began about nine years ago.

Failing to invest in stocks almost guarantees a smaller nest egg. Maybe it’s time for those on the sidelines to consider making small, but frequent, investments in the stock market.

Read: Some millennials wonder whether it’s finally time to take the plunge into stocks

If you had done so three years ago, you would have gone through some periods of difficulty. But, as you can see on this chart, periods of falling stock prices were actually opportunities. Your small, regular investments would have been purchased at cheaper prices, setting up even bigger gains when the market eventually recovered:

The S&P 500 Index for three years through Feb. 12.

In his most recent annual letter to shareholders, Berkshire Hathaway CEO Warren Buffett said “the years ahead will occasionally deliver major market declines — even panics — that will affect virtually all stocks.”

He also said neither he nor anyone else could predict when panics would take place.

Buffett added: “During such scary periods, you should never forget two things: First, widespread fear is your friend as an investor, because it serves up bargain purchases. Second, personal fear is your enemy.” The italics are his.

Some facts

We cannot say what the stock market will do during any given period. But we know for certain that 29 of the 30 Dow stocks were cheaper at the close Feb. 12 compared with the close Jan. 26:

Company Ticker Price change – Jan. 26 through Feb. 12 Price change – 2018 through Feb. 12 Price change – 2017
Exxon Mobil Corp. XOM, -0.16% -14.1% -8.6% -7.3%
Chevron Corp. CVX, -0.61% -13.1% -9.0% 6.4%
3M Co. MMM, +0.95% -11.4% -2.6% 31.8%
Home Depot Inc. HD, -0.18% -11.2% -2.9% 41.4%
Pfizer Inc. PFE, +0.81% -11.2% -4.3% 11.5%
Merck & Co. Inc. MRK, -0.96% -10.7% -1.5% -4.4%
Intel Corp. INTC, -0.83% -10.5% -2.9% 27.3%
Johnson & Johnson JNJ, -0.24% -10.4% -6.8% 21.3%
International Business Machines Corp. IBM, -0.43% -9.5% -1.3% -7.6%
Coca-Cola Co. KO, +0.50% -9.4% -4.2% 10.7%
UnitedHealth Group Inc. UN, -0.79% -9.2% 2.4% 37.8%
Caterpillar Inc. CAT, +1.10% -8.8% -3.4% 69.9%
Verizon Communications Inc. VZ, -0.06% -8.4% -5.3% -0.8%
Walmart Inc. WMT, +1.44% -8.2% 0.8% 42.9%
General Electric Co. GE, -1.01% -8.1% -15.1% -44.8%
McDonald’s Corp. MCD, -0.92% -8.1% -4.8% 41.4%
Walt Disney Co. DIS, +0.71% -7.8% -3.8% 3.2%
United Technologies Corp. UTX, -1.26% -7.7% -0.1% 16.4%
Travelers Cos. TRV, +0.32% -7.5% 1.8% 10.8%
Procter & Gamble Co. PG, +0.21% -7.3% -11.5% 9.3%
DowDuPont Inc. DWDP, -1.52% -6.7% 0.9% 24.5%
Visa Inc. Class A V, -0.10% -6.2% 3.9% 46.1%
Goldman Sachs Group Inc. GS, +0.94% -5.6% -0.6% 6.4%
Microsoft Corp. MSFT, +0.79% -5.2% 4.2% 37.7%
Apple Inc. AAPL, +1.00% -5.1% -3.9% 46.1%
American Express Co. AXP, -0.15% -4.9% -4.6% 34.1%
Cisco Systems Inc. CSCO, +1.55% -4.6% 6.0% 26.7%
JPMorgan Chase & Co. JPM, +0.62% -3.9% 4.5% 23.9%
Nike Inc. Class B NKE, -0.17% -3.0% 5.5% 23.1%
Boeing Co. BA, -0.19% 0.2% 16.6% 89.4%
Source: FactSet

You can click on the tickers for more information about each company, including price ratios, news and financials.

Exxon Mobil Corp. XOM, -0.16%  and Chevron Corp. CVX, -0.61%  were the worst performers in the Dow from Jan. 26 through Feb. 12, as the price of West Texas crude oil CL1, -0.72% declined 10%.

On Aug. 23, I published an article saying that might have been the perfect time to buy shares of Exxon Mobil and Chevron. Since then, even with the recent decline, the price of oil has risen 18%, while shares of Exxon Mobil have pulled back slightly and Chevron’s stock has risen 7%. Surely a modest increase in U.S. wages and panic fear of resultant inflation aren’t enough to put the brakes on the positive supply-demand outlook for oil or the growth of the U.S. economy, for that matter.

These S&P 500 stocks, most of them widely held in mutual funds and hedge funds, were down at least 15% from Jan. 26 through Feb. 12:

Company Ticker Price change – Jan. 26 through Feb. 12 Price change – 2018 through Feb. 12 Price change – 2017
Chesapeake Energy Corp. CHK, -3.86% -28.8% -28.0% -43.6%
Chipotle Mexican Grill Inc. CMG, -1.23% -22.9% -12.0% -23.4%
Expedia Inc. EXPE, -1.03% -22.0% -14.2% 5.7%
Newfield Exploration Co. NFX, -2.50% -21.1% -15.1% -22.1%
Apache Corp. APA, -1.08% -20.7% -9.7% -33.5%
Noble Energy Inc. NBL, -1.69% -20.2% -10.9% -23.4%
United Parcel Service Inc. Class B UPS, +1.18% -19.9% -10.8% 3.9%
Arconic Inc. ARNC, -0.24% -19.5% -8.8% 47.0%
Cboe Global Markets Inc C, +0.56% -19.2% -11.2% 68.6%
EQT Corp. EQT, -0.78% -18.7% -16.1% -13.0%
MetLife Inc. MET, +1.30% -18.5% -11.7% -6.2%
Devon Energy Corp. DVN, -3.38% -18.4% -13.6% -9.3%
Baker Hughes, a GE Co. Class A BHGE, -3.39% -18.0% -15.1% -51.3%
Align Technology Inc. ALGN, +0.26% -17.9% 4.9% 131.1%
Scana Corp. SCG, +1.01% -17.9% -10.4% -45.7%
Hess Corp. HES, -3.04% -17.8% -7.0% -23.8%
Principal Financial Group Inc. PFG, -0.19% -17.6% -12.4% 21.9%
Gartner Inc. IT, +0.52% -16.8% -4.0% 21.8%
Affiliated Managers Group Inc. AMG, +0.41% -16.0% -11.7% 41.3%
Goodyear Tire & Rubber Co. GT, -2.56% -15.8% -6.8% 4.7%
Cimarex Energy Co. XEC, -1.11% -15.8% -17.3% -10.2%
Cadence Design Systems Inc. CDNS, -1.81% -15.7% -7.7% 65.8%
Tractor Supply Co. TSC, +0.00% -15.7% -10.8% -1.4%
McKesson Corp. MCK, -1.91% -15.7% -4.4% 11.0%
PulteGroup Inc. PHM, -0.62% -15.5% -12.2% 80.9%
Franklin Resources Inc. BEN, +0.03% -15.3% -10.4% 9.5%
Invesco Ltd. IVZ, -0.03% -15.3% -11.0% 20.4%
AmerisourceBergen Corp. ABC, +9.30% -15.2% -2.6% 17.4%
Source: FactSet
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