<p>Ever wonder why I harp on the importance of "buying the dips" rather than chasing markets upward? Well, over the past two weeks, the stock market offered textbook proof. We all finally saw what the Federal Reserve had up its sleeve in terms of a global solution to the subprime mortgage crisis. </p>
<p>Now, I didn't expect this gift from the Fed to please everyone. But, to be completely honest with you, I also didn't expect Wall Street to react quite so violently to the Fed's decision to lower overnight interest rates by "only" a quarter-point (to 4.25%). Most economists were predicting a move of 25 basis points, rather than 50. So 25 hardly came as a surprise, much less a shock. </p>
<p>The Fed's latest move should calm the nerves of investors who fear an implosion of our financial system, and right now we're witnessing a lot of irrational, crowd-driven behavior in the financial markets. But what is the real moral of this drama on Wall Street? Short-sighted investors always press the panic button whenever they feel that the nation's central bank isn't doing enough to boost the economy. As a long-term investor, don't let these sudden jolts throw you. The smart course is to accelerate your buying, as the market corrects itself, scoop up some amazing year-end bargains.</p>
