Answer the following questions based on the following paragraph.

“The time to buy stocks is when blood is running in the streets”, said one famous investor in the early nineteenth century. The market currently (i.e., in 2008) is down so, should I begin buying stocks, given that I am a long-term investor? It makes sense, despite the fact that my guts tell me “sell”, and also because down the road the market will rebound anyway and so I will not regret it. I should not fear the temporary market swings. My adviser also is recommending that I do not sell but start buying. My adviser also tells me that when investors are frightened that is the good time to buy. Sometimes, however, he tries to sell me a “hot stock”. Should I believe him and follow his recommendation? But what is a hot stock, anyway? Why is he telling me that? Doesn’t he tell the same thing to his other clients? Am I so special?

a. When would buying a stock not be prudent?

b. Should investors listen to “market experts” on buy/sell recommendations or should they engage in sound stock-trading activities? Discuss.

c. Should long-term investors fear volatility of the stock market? Explain.