August volatility is here. So is a major market selloff.

The market slide that started at the onset of the month heated up this morning, with all of the major indices selling off hard. At the time that I write this, the S&P 500 is down 3.8%, the Dow Jones Industrial Average has shed 3%, and the Nasdaq Composite has plunged nearly 5%. As of early August, the S&P 500, Dow, and Nasdaq are down 6.9%, 5.6%, and 9.5%, respectively.

Stock market routs like this are miserable events. They sow widespread financial pain and suffering… along with a heaping dose of anxiety.

These steep downdrafts bring pleasure to almost no one, except for a maybe a few random short sellers who are reaping the rewards of betting against the market. But for the rest of us, there is no “Joy in Mudville” – no smiles when the stock market strikes out and loses, big time.

That said, stock market selloffs are the extreme events that create opportunity. They produce the panic selling and “washouts” that usually offer great moments to make savvy long-term investments.

“I will tell you how to become rich,” Warren Buffett famously remarked. “Be fearful when others are greedy. Be greedy when others are fearful.”

The sage advice seems so obvious when you read it in black and white. Yet it seems almost impossible to implement in the real world. That’s because when others are fearful, we usually are, too.

However, I recommend using the current weakness to establish new positions or add to existing ones.

Initially, many of these purchases could produce poor results, if the market continues its downward spiral. But if you are purchasing the shares of dominant companies at today’s discounted prices, you will probably be patting yourself on the back one year from now.

In other words, when buying into a hyper-volatile market, you often feel quite stupid at the outset. But over time, that “stupidity” starts looking a lot like genius.

Let’s take a look back at another volatile time in the market… Feb. 10, 2003. The day the SARS virus first made headlines.

Investors who purchased stocks during the SARS virus outbreak in 2003 would have endured some initial mark-to-market losses, as global markets continued sliding lower.

But those March 2003 lows turned out to be great buying opportunities.

As the above chart shows, all the major stock markets were much higher on Feb. 10, 2004, than they were on Feb. 10, 2003.

And within four years after the SARS outbreak, the S&P 500 had doubled, the MSCI EAFE Index of international stocks had tripled, and the Shanghai Composite had quadrupled.

Despite that “bad start,” the stock market ultimately rewarded the investors who “bought when others were fearful.”

Now, I would not dare to minimize the risks of investing in the current market volatility. To the contrary, I respect its power to destroy capital by falling much lower than it already has.

But history tells us that moments like these are what buying opportunities are made of. So, if you have the stomach for it, do a bit of buying… even while others are fearful.

In fact, I recommended two new positions to my Fry’s Investment Report subscribers earlier today. These two particular stocks have been on my “shopping list,” and they’ve now dipped to very attractive buying levels…

Click here to learn more about these companies and how to join me at Fry’s Investment Report.

Now, while we prepare for the week ahead, let’s look back at what we covered here at Smart Money in the past week…

Smart Money Roundup

The AI Stocks Set to Soar This Summer

For nearly two years, AI chip stocks have been the market’s biggest winners. But we believe the AI industry is rapidly approaching a critical inflection point. And soon, a different kind of stock will reign supreme. 

In this Special Guest Issue, Luke Lango joins us to continue discussing Phase 2 of the AI Revolution – and a new boom headed our way. Continue reading here.

“Everyone Knows” AGI Is Coming… but How to Prepare?

“Everyone knows” are often the scariest words you’ll hear as an investor. It means people are starting to bet in only one direction, leaving no one left on the other side of the trade. As for the road to AGI, we know artificial intelligence will make many of our jobs easier – but there’s also a dark side many investors have willfully ignored.

To learn more from our Smart Money contributor Thomas Yeung, click here.

Elon Musk Is Shaping the Future of AI Again – Here’s How Investors Can Profit

The healthcare industry has entered the “Age of AI,” and Elon Musk’s Neuralink is becoming one of the leaders. He and his team have built a unique kind of brain surgeon – a robot called “R1” that precisely implants Neuralink’s medical device, the “N1.”

This experiment is called PRIME, and a second patient has since received the implant. But what does that mean for the future of AI – and your wallet?  Click here to read more.

The FOMC Statement Is Out – Here’s What Investors Need to Know

On Wednesday last week, the Federal Reserve decided to leave interest rates unchanged at the long-awaited July Federal Open Market Committee (FOMC) meeting. There’s no doubt that there will be a rate cut in September, but the question is by how much? 

In this Special Guest Issue, Louis Navellier discusses what follows this announcement, and what more to expect. Learn more by clicking here.

Looking Forward

Amid the current stock market bloodbath, we’re all anxious and frustrated. There’s no doubt about that.

However, now is not a time for panic.

As we’ve discussed today, stock market selloffs create opportunity. They offer great moments to make savvy long-term investments.

In times like these, when markets take a nosedive, there are some things that you should do… and also some things that you definitely should not do.

That’s why, in your next Smart Money, I will be sharing some sage – and timely – advice from InvestorPlace CEO Brian Hunt.

Stay tuned.

Regards,

Eric Fry