Donald Luskin explains why the best time to buy is when everyone else is scared.

But that would be giving in to panic, wouldn't it? Yes indeed, which brings me to my next simple solution: Buy everything you can. Go bullish. Sound crazy? Maybe, but there's some sound logic to it. And simple logic, too — logic that has served investors well for centuries. When things are most uncertain, most complex, most opaque, most scary — then you know that you'll be buying at bargain prices.

So even if a lot of bad news really does end up coming true, you'll have paid such low prices that you won't get too hurt. And if after a couple of weeks it turns out things weren't really all that bad, then you'll make out like a bandit.

How can I say that you'd be buying at bargain prices when stocks were at all-time highs just five weeks ago, and have only fallen about 7% from there? Hey — don't act like that 7% drop is nothing. It has you plenty scared, doesn't it? When you think about selling everything just to end your fear, you're thinking how horrible that 7% drop is. But when I suggest buying, you think that 7% is nothing. Am I right?

I've got friends who work in the financial industry and they're practically jumping out of windows. Do they know more about what's going on than I do? Maybe at the micro level... but I think they're missing the forest because of all the trees. Scared investors depress prices below their rational value, which means this is one of the best times to buy.

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