DAVE HARRIS: Welcome to Dave On Stocks. This is podcast #44. It is Wednesday morning February 28^th 2007-this show is called "the day after the mini-crash". I'm Dave Harris. I'm a long term investor with a diversified portfolio of stocks.

A combination of factors resulted in the big beating yesterday (February 27, 2007). First, I think we were due for a correction. The market has had a tremendous run up. A sell off was generally expected, although we didn't expect such a decline in 1 day. And we sure got it yesterday. The Dow fell 416.02 points. S&P slid 50.33 points. The NAZ dropped 96.65 points. This was the worst fall since the decline just after September 11^th.

I think what sparked it off was the China market's tremendous decline of almost 9% overnight. This fall in the Shanghai Composite Index worried investors about global economic health. China has been one of the most promising markets with real growth potential for companies such as Starbucks (SBUX) and Yum Brands (YUM). China is one of the main reasons I like those stocks.

Add to the disastrous mix concerns about the subprime lenders. These are companies that make loans to people who don't quality for the prime rate loans, and they're having some trouble. The worry is that it will also hurt the prime market. I do not recommend you buy into these subprime lenders such as Lennar (LEN) or Freemont General (FMT). I would also stay away from Freddie Mac (FRE), even though they announced tightening standards for subprime loans.

So what do we do in this situation? Yes, many factors were involved. But I really think it was mainly a correction that was long overdue. The worst is over and I think the market is going to slowly climb from here. Sure, we will have other down days, obviously. But the long term trend will be up. Stocks are the best investment you can make. This as an opportunity to buy quality stocks that took a hit since yesterday's mini-crash. For example, I would buy McDonald's (MCD) here. In January they said 4^th quarter profit doubled. The stock has fallen to $43.72 per share this morning (Wednesday 2/28/07) from Monday's close of $45.80.

I also recommend Target (TGT). The discount store had a higher 4^th quarter that beat estimates. Profit was $1.29 per share from $1.06 last year. Same store sales rose 4.8% and quarterly revenue climbed 16.3%. Key strength was in Target's home decor and clothing. I'm especially impressed with the credit card business last year, which rose about 53% year over year. But TGT shares fell after results, along with the broader market, because of the mini-crash. Here's a great buying opportunity. I see real growth for Target. I think the stock is going to $68 per share.

I also like Apple (AAPL). The company will be delaying Apple TV. But that is not a good reason to sell the stock.

Fed Chairman Ben Bernanke felt there wasn't any single cause for the market drop yesterday and still expects moderate growth in the economy. One thing on my mind is former Fed chairman Alan Greenspan, who said Monday that our economy may be headed for a recession. I think the market was troubled by that yesterday too, in addition to the latest economic data. Durable goods orders in January fell 7.8%-that was much more than expected. Computers and transportation orders were lower. Commercial aircraft was especially weak. This lower reading on manufacturing doesn't worry me because our economy is supposed to be slowing down.

Consumer confidence looks good. The index rose to 112.5 which is above expectations. People are confident the job situation will improve. Existing home sales rose 3%, and that was better than expected. But I wouldn't get too excited about that because median home prices keep falling. I wouldn't assume that housing is turning around.

This morning the market is rebounding. Now the indexes are bouncing back. Currently the DOW is higher by 54.16 at 12,270.40. The NAZ is up 8.51 at 2416.37. The S&P is up 7.60 at 1406.64. I think now is a good time to start adding positions in stocks at a discount.

That's all for today's podcast of Dave On Stocks. I'm Dave Harris. Write me with any questions or comments at the "contact us" link on this page. My website is www.daveonstocks.com. I'll talk to you again soon with another podcast. This is Dave On Stocks.