“LOOK at market fluctuations as your friend rather than your enemy. Profit from folly rather than participate in it”. These wise words from billionaire investor Warren Buffett are especially applicable now as US stocks are down more than 10 per cent from this year’s peak –producing the first correction in over two years. Investors have been on edge over the past few weeks due to the uncertainty surrounding the debt crises in Europe and the US, which was heightened by Standard & Poor’s (S&P) downgrade of the US’ credit rating for the first time from AAA to AA+ last Friday.

Consequently, the MSCI All-Country World Index fell for a 10th day on Monday, the longest losing streak since July 2008, as two stocks declined for every one that advanced. The gauge for developed and emerging markets fell as much as two per cent, extending declines from May’s high to 20 per cent. The sell-off has sent benchmark indexes in 25 of the 45 countries in the global gauge into bear markets including China, the UK, France, Germany, Spain, Italy Switzerland, Brazil, Russia and India.

However, the current market pull-back represents an excellent buying opportunity for investors to buy into companies that are fundamentally strong. Look for companies with established track records of growth, sound management teams and diversified revenue streams, while bearing in mind the strategy — buy low and sell high. Additionally, though your portfolio may currently be moving in the wrong direction, this is your chance to “average down” by purchasing additional shares at lower prices and therefore reducing the overall average cost paid. The stock market will fluctuate, but as a solid investor, it is important to understand your long-term investing strategy and stay focused on your goals.

To put this in perspective, between August 1 to 8, 2011, the benchmark Dow Jones Industrial Average lost 1,322 points or 10.9 per cent and the S&P 500 Index dived 167.48 points or 13 per cent. Therefore, it is no surprise that several components such as Apple Inc (NASDAQ: AAPL), the biggest tech company which has demonstrated its resilience time and time again, has declined 10.9 per cent in the past week to close at US$353.21 per share on Monday. However, this is not the first time that AAPL has seen this type of movement, as in 2008, it traded as high as US$200.26 in January and as low as US$ 81.93 in November. Since then it has rallied 393.82 per cent to as high as US$404.59 in July 2011.

While AAPL isn’t an income stock, it is a prime example of a growth stock, and one which SSL has been recommending for at least the past three years. AAPL consistently achieves strong revenue growth, with its fiscal third-quarter sales surging 82 per cent to US$24.67 billion, and demonstrates its innovative ability to continue setting trends in technology and to dominate the market.

Another stock to consider is Caterpillar Inc (NYSE: CAT), the largest manufacturer of mining and construction equipment. After recently touching its 52-week HI of US$116.55 on May 2, CAT pulled back below US$90 following the trend of the overall market. Despite missing analysts’ estimates for its latest round of earnings, the company still delivered a solid performance with a 44.27 per cent year-over-year increase in Net Profit to US$1.02 billion on revenue growth of 37 per cent to US$14.23 billion. This positive growth will continue to be fuelled by the company’s strong branding, competitive pricing abilities and extensive reach into rapidly developing emerging markets.

The US’ biggest conglomerate, General Electric Co (NYSE: GE), can also be considered as a “bargain” at its price of US$15.43 on August 8, 2011. GE’s diversified products and services range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products. For its second quarter GE, reported a 20.9 per cent yoy increase in profit to US$3.76 billion or US$0.35 a share.

The stock is noted as being highly oversold following a 13.85 per cent fall-off over the last week, providing a good buying opportunity for investors. With a Price to Book Value of 1.37 times, below the industry average of 1.85 times, the share offers the potential for growth, and its current Dividend Yield of 3.26 per cent also makes it an attractive income stock. These fundamental characteristics along with GE’s strategic investments make the company an ideal long-term investment choice for your portfolio. Its ability to sustain earnings during a recessionary environment is attributable to its diversification throughout several industries worldwide and the non-discretionary demand for its products.

These companies, and equity markets overall, have demonstrated that after being down, they must rebound. Importantly, as policymakers implement strategies to boost growth, this in turn will help improve companies’ performance and drive their stock prices going forward. Moreover, one should also bear in mind that the downgrade of an economy will not necessarily warrant a prolonged weakness in equity markets and other asset classes. Therefore, investors should not miss out on this excellent buying opportunity, as companies are slated to continue to exceed analyst expectations for the remainder of the year. Remember Buffet’s simple philosophy “All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.”

Gillian Bernard is a Wealth Advisor at Stocks & Securities Ltd. You may contact her at gbernard@sslinvest.com.