When there is Blood on the Streets...BUY!BUY!

As Charles Dickens once wrote, there was the best of times and there were the worst of times. Right now, it is not the worst,but most investors are certainly not feeling like its the best either. However moments of distress create windows of buying opportunities. Famous banker, JP Morgan once said "Buy when there is blood on the streets.".

Those words should be written on a plaque and hung on a wall for every investor that wonders when is it a good time to buy when markets are falling. One of the most successful investors of all time, Warren Buffet, stated that the most money he ever made were in stocks that he picked up in bear markets. Bear markets are not a bad thing,they clean the speculative froth, return a sense of normalcy by reminding and by reminding investors that there is always risk when buying equities.

Bear markets can overshoot on the selling side, and they do throw the baby out with the bathwater. You can buy specific, well balanced sheet companies that whose share prices are falling because companies in the same sector made bad decisions and so all the share prices in the same industry get hit, and hit hard.

For example, one bank stock that I recently purchased shares in is City National Bank (CYN-NYSE). City National is called the "bank of the stars". Their clients must have $1 million in assests to open an account and they did specifically with clients who have between $1 million and $250 miilion. They have a long list of Holllywood clients as well as entrepeneurs. They are based in California, Nevada, and New York. They have also acquired numerous smaller banks over the years as well.

This bank, unlike its bigger rivals such as Citigroup, Bank of America, Wells Fargo and other large investment firms, did not participate in any of the subprime mortgage and collaterilazed debt obligations mess. They have not needed any outside cash infusion to improve their cash position and they have had no loan losses for 16 quarters (3.5 years). Yes, zero, nada, nothing. City's share price had hit a 52 week high of $78U.S. and I picked up these shares lst month at $59.84. The shares traded as low as $49.75 during the last downdraft, but have rebounded back to where I bought them.

Sure City Bank might not make as much money as they did in previous years,no bank will as the U.S. economy slows. But financial stocks are in a bear market and they got lumped in with the banks that deserved to get hit. City at this price, pays a 3.0% dividend yield, which is secure, they have no writedowns to make, an excellent management team and a very wealthy customer base that is not affected by the credit crunch as the other banks are. Its a steal at this price, and its definitly on my buy list.

Another stock is TD Bank (TD-TSX), it is another bank that has no subprime exposure, a good balance sheet, a secure dividend and they own 40% of TD Ameritrade (a discount broker) that is reporting stellar earnings.

I am not saying that any of the big investment banks are going to go under, and now might be a good opportunity to pick some of them up. However, why not buy the banks who don't need cash infusions,and most likely will grow their dividends quicker than the banks who have have recently cut them. TD's yield is close to 3.5%

In the insurance field, I would be a buyer of Travelers Group $46.74(TRV-NYSE). This is one of the largest property & casualty insurers in the U.S. They have no subprime exposure,they beat the latest earnings estimates, their commercial debt is on watch by credit agencies to have their debt ratings UPGRADED and they have historically been quite opportunistic in tough financial times and they come out of it making a killing. Travelers pays a 2.4% yield.

As for stocks that I previously recommended. Buy more General Electric $36(GE-NYSE). They are now paying a higher dividend from when I recommended it, they are making more money and their shares are at a slightly lower price when I first put them on the buy list. GE has no cash flow problems, its diversified conglomerate, it has a Triple AAA rating on its bonds (the highest rating you can get)and it all of its divisions are growing.

JP Morgan (JPM-NYSE)is another good one to keep buying, as well as Oracle (ORCL-NASDAQ)and Berkshire Hathaway (BRK.B-NYSE). Berkshire has $40 billion in cash, no debt and has more than enough money to make smart acquisitions.

Folks, markets go up, they go down and they can be very volatile. But what you own is just as important as how your shares are doing. If you own dividend paying stocks, with stable earnings, and a good future ahead of it, you you will always come out ahead in the game. Maybe not right away, but you will in the long term.

Don't get lost in the day to day hype of volatile markets, own solid companies that you understand, and take advantage when everyone is selling. Sometimes your portfolio might take a hit when markets go bad (mine did), but that is no reason to make foolish mistakes. It just represents a potential opportunity to make more money in the long term.