The Best Investing Opportunity in 35 Years

Was Tampa Bay Rays manager Joe Maddon really proposing a solution to the global financial crisis when he said, "Confidence is really a wondrous thing in regard to us humans"?

You'll have to read on to find out, but he might as well have been. The simple fact is that our financial markets -- in the short term -- measure nothing more than investors' near-term outlook for the economy. With a little bit of confidence in the system, banks would start lending again, investors would start buying stocks again, and the global economy could begin to heal itself.

That, however, is not happening -- because we're not confident. We're pessimistic. A report released this week found that consumer confidence in the U.S. is at an all-time low, with one economist calling the data "extraordinarily awful."

But that extraordinarily awful data could prove to be very good for you, Joe the Investor. (Sorry -- I had to work it in somewhere before election season ends!)

Here's how
Chuck Akre isn't a professional baseball manager, like Joe Maddon is, but he's a similarly white-haired dispenser of plainspoken wisdom. He also happens to be a money manager who's had an extraordinarily bad year.

His FBR Focus Fund (FBRVX) is down more than 36% year-to-date, with holdings in American Tower (NYSE: AMT  ) , Penn National Gaming (Nasdaq: PENN  ) and CarMax (NYSE: KMX  ) having taken particularly hard hits.

Yet when Chuck stopped by our offices last week, he put aside his recent performance and said with a smile that times like these are "nirvana for the value investor." That's because good companies are on sale across the board for reasons that have nothing to do with their long-term intrinsic value.

Here's why
Chuck noted that there are three groups that might normally be buying stocks but for a variety of reasons are either sitting this market out or pulling money from the market. They are:

  1. Individual investors, because they're scared witless.
  2. Corporations, who aren't repurchasing cheap shares because they need to hoard cash to survive the credit crunch.
  3. Hedge funds, which are going to cash, to meet demand for year-end redemptions.

That creates across-the-board artificial downward pressure on stocks, and it's the reason cash-rich names such as Apple (Nasdaq: AAPL  ) , eBay (Nasdaq: EBAY  ) , Nokia (NYSE: NOK  ) and Texas Instruments (NYSE: TXN  ) were selling earlier this week for less than 10 times this year's free cash flow.

Again, that's nirvana for the value investor.

A thought experiment
Now, go back to the end of 2007, when you were thinking about buying Apple for $200 per share. If I'd told you then that in a mere 10 months you'd be able to buy Apple for $90 per share, you (1) would not have believed me and (2) would have considered that a fantastic buying opportunity.

Well, here we are 10 months later, and the entire market is down 40%. Yet instead of backing up the truck on cheap stocks, the three groups of investors I mentioned above are selling them. Even a seasoned money manager like Chuck Akre has been getting calls from longtime clients demanding he go to cash.

A call to action
We haven't seen sustained and widespread pessimism like this since the Vietnam War and stagflation combined to depress the heck out of folks in the 1970s. But as Chuck was quick to point out, the 1970s was a very good time to have been a buyer of stocks.

Today, Chuck Akre is lined up beside investing luminaries such as Warren Buffett, Charles Munger, Marty Whitman, and many more -- and all of them are declaring that now is a good time to buy stocks and all of them are going out and doing it.

So what are you doing? If you're looking to take advantage of current pessimism to buy up cheap, high-quality companies, join Motley Fool Stock Advisor free for 30 days and read all about Fool co-founders David and Tom Gardner's top picks for new money now.

And even though Joe Maddon was talking about the need for his star hitters to start getting some hits, when it comes to success in anything, confidence really is a wondrous thing.

Tim Hanson owns shares of CarMax. Apple and eBay are Motley Fool Stock Advisor recommendations. CarMax and Nokia are Inside Value picks. You can be confident in the Fool's disclosure policy.


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Comments from our Foolish Readers

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  • Report this Comment On October 30, 2008, at 4:57 PM, cooolbabu wrote:

    We can't load up the truck, coz we sold the truck. These times too scary for Joe.

    Joe the Investor

  • Report this Comment On October 30, 2008, at 5:33 PM, ATrustingFool wrote:

    Not to scary for me... I've seen this before and missed the boat on that one. Not again !

  • Report this Comment On October 30, 2008, at 7:00 PM, TrailerParkJawa wrote:

    I'm sure I speak for a lot of "average Joes" when I say unfortunately I simply don't have extra cash to put into the market at this time. It all comes down to timing, I decided to buy place in May and no longer have free cash.

    I'm still contributing to my 401k but thats it. If I had say 10 grand sitting on the sidelines I'd be more comfortable using that to extend my 6 month reserve of cash another 3-4 months since getting laid off in this market could vary well be for a long time.

    Basically, right now I bet the cash most people have is cash they want to be availalbe within the next 5 years.

  • Report this Comment On October 30, 2008, at 11:47 PM, courtneTHEgreat wrote:

    add the fact that it will take some time to recover and that the recession will continue to drive stocks lower and that all of the BAD news has not hit the press, yet.... is this really the time to buy? Have we seen the bottom?

  • Report this Comment On October 31, 2008, at 12:12 AM, paultaut wrote:

    I vote for running like crazy, wait for the election dust to settle and look to nibble a bit mid to late November. SSO

  • Report this Comment On October 31, 2008, at 12:42 AM, GoNuke wrote:

    You can't value stocks using historical data because next years earnings and cash flows will be a lot lower. They are very sensitive to marginal changes in sales volumes.

    The cost of debt will go up because lenders are more risk averse. The Fed rate could drop to zero and it wouldn't affect the riskiness of lending money to US corporations and citizens.

    There is also the issue of a paradigm shift. The big run-up in stock values preceding this crash was fueled by massive leverage -the same thing that brought the house of cards down. That isn't going to happen again soon.

    The big danger now is that the US dollar is highly over-valued. Capital is fleeing the rest of the world in favour of the perceived safety of US T-bills -why else would people accept near zero yields. Ironically this capital flight is making the US dollar unsafe. This panic has generated the next big bubble: the US dollar. When it bursts more wealth will be destroyed.

    It may well be a good time to invest but not necessarily in the US. There is a danger that many US assets are still overvalued because the US dollar is over-valued.

  • Report this Comment On October 31, 2008, at 9:19 AM, Mojo218 wrote:

    If you had some $ to invest and believed that the Feds are printing so much paper money that the US will look like Greece at the end of WW II, how/where would you put your cash to prevent the trashing of your cash? By the way, do you know what happened in Greece after the war? (Ans.) The government added 3 zeros to the paper bills.

  • Report this Comment On October 31, 2008, at 10:22 AM, vest0r2 wrote:

    Picking and choosing. And keeping my fingers crossed. I don't want to lose another 30% of my investments. Sticking to can't-live-without-them services, like health care and trash collection. Got badly burned and am very unhappy with the market in general.

    Where's MY $700 Billion bailout?

  • Report this Comment On October 31, 2008, at 10:52 AM, lfc2005 wrote:

    I like the optimism, but haven't we been reading these "Best Investment Opportunity" headlines for the past 3-5 years ??

    With the volatility not going away anytime soon, a trading mentality will likely outperform a buy and hold strategy in the medium term. I HATE saying that, but given the new rules driven by the 'bailouts', and more importantly the unanswered questions regards who's next for a helping hand, I can't help feeling we're applying old world rules to a new world order ??

    Please tell me I'm wrong. I want to drink the Cool Aid, but ..... my ..... hand ...... won't ........ move !!!!

  • Report this Comment On October 31, 2008, at 6:16 PM, kayakmastr wrote:

    These comments are long on opinion and short on analysis. Fundamental premise: Well managed companies selling things people want and need will increase in value over time. Can this premise be wrong? Clearly the preceived value may incease too rapidly producing a correction and short-term loss for those who were too optimistic. So if you accept the premise, you should buy when the most severe correction occurs realizing that you most likely did not catch the local minimum. The momentum investors are the ones who are lost. They buy when prices are rising.

  • Report this Comment On November 01, 2008, at 1:02 PM, jrj90620 wrote:

    When the U.S. Dollar crashes that will drive all stocks,commodities,real estate and real assets up relative to the Dollar.The riskest thing to do now,in my opinion,is to be invested in more Dollars than necessary for short term use.

  • Report this Comment On November 05, 2008, at 4:24 PM, CaptDLight wrote:

    Obama's election is a "new BIG deal" and the markets will react by slowly changing direction between now and January 2009. This change will be masked by the short term profit taking crowd. I think savvy investors would be wise to consider buying the stocks of the Companies that they themselves are still using; as that will point to many Companies that are leaders of this trend. Costco and Home Depot, spring to mind.

    Using the above comments about turning back the "stock clock", it is not if to buy stocks now it is which ones will give you the most bang for your buck! I would suggest that owning 2 shares of IRBT is better than 1 share of GE or 1/10 share of Apple; what do you think?

    +

    A Comment for all:

    I feel that if the Gov't. invests in any Companies, the shares that the Gov't. gets should be Full VOTING shares; that way the Gov't. can protect themselves (and us) from future questionable "deals"... and then the Gov't. should be able to sell them for a profit in the future with all the money going into the Social Security fund for all American's to share.

  • Report this Comment On November 07, 2008, at 11:47 AM, floyd3370 wrote:

    Agree with Trailer Park Java. I have no extra cash to commit to the market. My safety net was in mutual funds and the value on those has dropped by 45% since January 1. This leaves me in a precarious position if I lose my job. I'm also still contributing to my 401 K; but that, my IRAs, and all other retirement money (in 403(b) plans) has nosedived, along with my kids' college 529 savings plans. I have lost faith in the market, and I'm not willing, ready, or ABLE to invest more money in a sinking ship. I'm holding still, waiting for the final crash to occur. I don't think we're there yet. Call me a chicken little, but right now, I'm scared spitless of this market. If I had a half million lying around in the bank, I wouldn't be worried and I'd be buying stocks on the cheap also. Maybe I'm not the average investor, but I've been in the market since 1983, and this one has gotten me rattled. Plus, if you look at the TOTAL returns on stocks since 2000, the market is terrible. Just because Warren Buffet says its a time to buy, doesn't mean so for the average Joe.

  • Report this Comment On November 07, 2008, at 12:30 PM, NixinKome wrote:

    Its not just the market[s] that are terrible. The banks' liquidity, which seems to be improving lately, the recessionary pressures, the housing price situation, foreclosures and actual and future layoffs let alone very many small companies ceasing operations and large companies posting greatly reduced profits and mothballing operations to try to manage their own necessary lifeblood debt for survival shows that the whole world is economically contracting.

    Asian economies that depend on exports are particularly badly hit: Korea; Singapore; Taiwan; Hong Kong and too bad about Vietnam. Even domestically protected China, with all their foreign reserves, is now projected for max. 7% growth whereas it was 11% last year and not so far of that just before the Olympics. Many enterprises there are failing because export markets, rightly, do not want to buy plastic crp for a Happy Christmas. This will affect their economy too. Beware of the "Domestic Strength" line of argument.

    The last thing our globe needs is a wave of politically inspired protectionism when these effects are doing that anyway!

    Oh yes, I am writing from a U.K. view. My regards to you all in the U.S.

    Nick.

  • Report this Comment On November 07, 2008, at 1:14 PM, crepinginflation wrote:

    as phil donahue said "a brother is a c-span junkie"...well this brother wants to know if we want to balance the budget or create a stimulus ...when we cancelled the super collider project at wachahaxie..texas ...was that inflationary or created new jobs ...or just another green yugo plan?????

  • Report this Comment On November 07, 2008, at 1:31 PM, crepinginflation wrote:

    when stocks expierence a heavy beating, they usually rally at some point of time ...the degree of each rally is of course a facinating subject for technical analysis..for those who shun tech jargon,at least concern yourself with the term known as overhead supply...a fade factor for stock rallies ...such behavior actually boils down to investor psychology..now..for my own 2-cents worth if you don't believe in america ..BUY GOLD...is it true that the great depression generation was sending gold outside this country for fearing its collapse..i always remember that thought when we label generation next as not god fearing

  • Report this Comment On November 07, 2008, at 1:35 PM, okierobt wrote:

    Blame the market, blame your advisor service, but the truth is I must blame my own greed. How many times have others told us to never, never, never be afraid to capture profits when they are real. Fortunately I went all cash when down only 10% but what a difference the year would have been if I would have claimed my profits instead of trying to hit the home run. And that is no one's fault but my own! Buying back in carefully and now I am ready to capture reasonable profits as they come along.

  • Report this Comment On November 07, 2008, at 2:33 PM, Shagawa wrote:

    It's true that we're in a world of hurt right now. But if we go back to the root problem of this mess, it's jobs, followed by a lack of confidence (both in the markets and the government). This will be followed by increased spending (by everyone) once the job market improves and confidence is restored. We have too many greedy bankers and corporate executives taking advantage of us (other than greed, why would GM give Rick Wagoner a 64% pay increase last year?). But even in these times there are bargains galore. If you have a company whose earnings growth rate is higher than it's PE you probably just found a winner. And there are several of them out there. I'm still buying but I'm being selective. Just an example, AFAM. Bought in at $34, it dropped to $30, and then rose to over $50. I did a ton or research before buying and that's what's required now. I think this recession will go on through most of 2009, but remember, the markets usually recover a few months before any real economic improvements start showing up. Some of us old farts have been through these situations before and know you will rarely get a buying opportunity as the one we're in now. Good luck and don't give up!

  • Report this Comment On November 07, 2008, at 3:30 PM, Slavtrader wrote:

    I agree that the buying opportunity is coming, but I'm not convinced that we are anywhere near a bottom. While I can't call where the market will be 1 day or 1 week from now, I feel pretty confident that I can see where we'll be by mid 2009 - lower.

    The economy is in a world of hurt right now. The government keeps rolling money to the banks as though we are dealing with a liquidity issue. The problem is that is not at the root cause of the problem. Root cause is a solvency issue. No one feels comfortable moving money into the lending markets when they aren't sure who can make the payments. This is the case from the top end where a lot of corporate profits were hanging on over-leveraged, now worthless paper, to the consumer end where after 20 years of outsourcing high end middle class jobs and insourcing low end middle class jobs, we have now acted to successfully break the back of the golden goose.

    We've known that middle class folks weren't making a decent wage for a couple of decades and still kept expecting them to buy $50K Escalades, $10K Hawaiian vacations, and $750K homes in California and Arizona. We also knew that they had gone through the savings and inheritance, had maxed out the plastic, and were now living on a housing bubble that allowed them to keep refinancing - all the while not paying down any debt but rather amassing more debt and then refinancing the payments on that debt by pulling more equity out.

    And now we're here and we know down deep that it will take probably as long to get us out of this mess as it did to send us into it. And yet, I keep reading investment articles like the one above that seems to be driven by the slogan "invest now before it's too late". If you wish to grab a quick sawtooth run over a day or a week, maybe it's a good time to invest. If you're looking longer term, I'd say wait and see which of these guys really are solvent and which others are going to be driven out of business.

    No matter the decision, I've been investing for nearly 30 years and have never seen an economy with such deep-seeded problems as this. This will get a whole lot worse before it gets better - this year was about credit at the top end, next year will be about huge, huge job losses in the middle class that makes up the world's demand marketplace. I believe there's still lots of time to establish where the value plays are and where their low-end prices will finally be.

  • Report this Comment On November 07, 2008, at 3:47 PM, IHadJacks wrote:

    Its not the best investing opportunity YET... we have quite a while until we see the bottom. Expect Q1 2009 at the earliest IMHO. I am waiting with baited breath that the optimal time will come soon but it hasn't arrived yet. Once the new administration is in place and we have time to soak in the doom and gloom it should be optimal buying season, I'll reserving $50,000 in new buys for that day.

  • Report this Comment On November 07, 2008, at 4:15 PM, oldgoldbug wrote:

    One thing no one gives old Warren Buffett credit for is sitting on $35 Billion CASH while everybody else was waxing eloquent about Dow 20000 etc. Maybe you "Fools" should take a hint from the old master and realize he's not "backing up the truck" all the time. Warren is a permabull who is not always buying. Listen to some of the folks commenting above who have been waxed 30% and really hope they don't get pounded some more. There are problems with being buy and hold investors because as Keynes said "In the long run, we are all dead". Took til 1954 to surpass the 1929 preCrash high on the Dow. Keynes didn't even get to see it as he died in 1946.

    In fact, it looks to me like Buffett is hedging his bets with some pretty stout dividends to tide him over while things are recovering. Hmm, 10% from GS and GE and how much from CEG, oh 8 or 9% at least. Isn't that pretty close to or above the long term returns on the S&P 500? Any capital appreciation is therefore a bonus and Warren is still sitting on a wad of cash should things get worse. Buffett may be bullish but he sure as heck isn't stupid.

  • Report this Comment On November 07, 2008, at 4:47 PM, ymmij54 wrote:

    A year from now we'll be reading THE BEST INVESTMENT OPPORTUNITY IN 36 YEARS. Foolish Advice indeed!!!

  • Report this Comment On November 07, 2008, at 5:15 PM, URDFoolish1 wrote:

    I believe Slavtrader posted an excellent summary of the situation. Many have lived well beyond their means and now we are all paying the price. Not much will improve until the housing mess is righted; that will be difficult in that even the Fed doesn't know who owes what to whom in the derivatives arena. Financial leverage is great if you're sitting on the right side of the deal, but the house that leverage built hasen't stopped falling (imploding). Rarely have almost all markets (housing, stocks, bonds, commodities, gold, etc.) contracted so severely at the same time and on such a global scale. If you've got the financial power to do like Buffet, great, otherwise hang on, things could get a lot worse before they get better.

  • Report this Comment On November 07, 2008, at 5:53 PM, cjhakenkalk wrote:

    Ebay's explosive growth is due to their unique auction format that made it inexpensive and easy for buyers and sellers to meet. But sellers are tired of watching all thier profits gobbled up by fee increases Many are going to other sites. The very thing investors want, cash and profits, will be the very thing that will eventually undermine the things that made Ebay great, like a very inexpensive place to buy and sell. I have to thumbs down investing here for now.

  • Report this Comment On November 07, 2008, at 5:54 PM, homdet wrote:

    You are so right about non- millioniares being able to buy great stock at a great price! I bought 1,000 shares of Potash Corporation of Saskatchewan Inc. at $60.58 about one month ago. It ended today at $80.57. right at a $20,000 increase during this very tough time. Money more Money, I'm not missing out on this next 5 years in the stock market!!

  • Report this Comment On November 07, 2008, at 6:08 PM, Tabasco199 wrote:

    Fortunately I don't have much real cash in the market. This crisis is scary because it seems to me that "values" may not be what they seem, particularly for retail companies and product manufacturers, since so much of the earnings for the last decade or more have been fed by people purchasing beyond their means thanks to credit. Not just home equity loans, but even just credit cards. Individual restraint went out the window. I expect (actually, I hope!) that the next shoe to drop is tremendous losses due to the nonpayment of credit card debts. At a minimum, with fear in the air, people will be trying to pay off their outstanding debt before acquiring more. Thus, I think the earnings for the last few years are inflated, and they have a long way to drop to get back to a realistic level based upon sustainable consumption. So think twice when you see an incredibly low P/E or price/cash flow ratio. Cash flow might not be at those levels in a year. Not that these companies can't still make money, I just don't think you'll see as much of it, and in the short term the losses will mount.

  • Report this Comment On November 07, 2008, at 6:32 PM, Brugg17 wrote:

    I believe this is the absolute best time to be in the market. Most people like to shop when things are on sale. Well, the market right now is no different. I bought Fannie Mae at a 98.6% discount off its annual high and I am fully confident that it is going to bounce back and bounce back strong within the next 6 months, maybe sooner. I don't believe we're going to see this kind of buying opportunity again for a very long time to come. Now is the time to get back in the game!!!

  • Report this Comment On November 07, 2008, at 7:28 PM, gerscot wrote:

    Slavtrader has precisely expressed the problem of expecting a quick rebound. Over the past three years, there have been report after report of layoffs from mostly larger corporations, but also smaller companies shutting down altogether. At first, the numbers were relatively small, say 3000 - 9000. Then last spring there was a report of a downsizing at GM of 19000 and in the report was mention of a previous termination of another 31000. Hmm... a rather quick 50,000 consumers out of work - at one Co., and as GM goes so goes the nation? Of course, the auto industry is not the only sector in decline. We have created millions of out-of-work former consumers. And much of the problem was caused, (as Slav.T. so elequently described) by mortgage companies, car dealers and the entire spectrum of sellers of consumer products convincing all of us that we can really afford much more that we really think that we can. Bad credit, can't afford a down payment - no problem, come on down, we'll put you in a brand new car with no payments until next year ! ! ! How many families ran up over $100,000 in credit card debt.

    Bad credit will continue to hurt business and lead to more unemployment. The damage is not over yet. Maybe in 1 - 3 years ?

  • Report this Comment On November 07, 2008, at 8:19 PM, allDway wrote:

    I agree with what gonuke said in his post. You have to be aware that past stock prices cannot be a barometer for values this point forward. The horizon is looking pretty gloomy. Gold anyone?

  • Report this Comment On November 07, 2008, at 8:37 PM, journeywithme wrote:

    Seems to me that this is a dream come true for the investor who has kicked him or herself about missing opportunities to buy into get businesses cheap. Opportunities like this do come around... it seems about every 15-20 some odd years though! Use wisdom... but if you see a bargain... you might want to go for it. Be well.

  • Report this Comment On November 07, 2008, at 10:22 PM, DTRUMPTOWERS wrote:

    This is a fearful time... however, real estate is a tangible asset that will grow with the coming inflation. Also, REIT's pay great dividends... which some may want to consider. However, with Real Estate be careful of taxes, insurance and maintenance fees. Good Luck!

  • Report this Comment On November 07, 2008, at 11:54 PM, soitanly wrote:

    The only safe way for me to buy stocks now are to pick high dividend-paying issues, and sell covered calls a couple strikes above the price and a few months out to partly pay for protective puts a couple strikes under the price and a few months out.

    Eagle Shipping (EGLE) is around $10, pays over 20% (I think they're good for it at least one or two quarters out). So EGLE cost me around $11. The total position has been pretty solid, and EGLE has held pretty well on its own. Same for San Juan Royalty Trust (SJT). But some high-yield issues obviously don't have either cash flow or earnings to support the dividend payout. SJT is somewhat sensitive to the spot NG price, and EGLE is sensitive to the Baltic Dry Bulk index, and both are down. But the protected combos are OK. It's really a complicated way to play, and you have to roll the options regularly, but for the current hellish environment provides some insulation against massive downturns. Careful with the covered calls, if the stock rises rapidly (unlikely), your position can be called away.

  • Report this Comment On November 08, 2008, at 12:50 AM, adlib5 wrote:

    Its all a figment of our collective imagination. Why is this company worth 9 x p/e and some are worth 39 x. Does not make since. Wallstreet is mostly smoke and mirrors and especially in the current market nobody knows what happens on the other side. You best be a trader and carefully watch your entry points and take a few profits when you can if you want to actually make money in this market. Otherwise your money could be dead for a few years.

  • Report this Comment On November 08, 2008, at 6:23 AM, imothep wrote:

    Slavetrader sums it up precisely the way I see it. The credit problem is not a purely American phenomenon, though. We Europeans have been living far beyond our means, too. Property prices are plunging, foreclosures are increasing rapidly, bancruptcies are mounting fast. This crisis is like a 3-course meal.

    The starter

    The main course

    The dessert.

    The financial crisis was the starter.

    Foreclosures, lay-offs, bankruptcies, increased unemployment is the main course.

    A prolonged recession could be the dessert.

    Obama has a historical chance to avoid doing the same mistake as was done in '29. Kevin Hassett of American Enterprise Institute outlines it in an article in my local (Danish) newspaper. The 2 main pitfalls are increased protectionism through imposing import duties on goods, and the proposed abolition of secret ballots in trade unions. (Similar events took place during the depression in the '30's, with the imposing of import duties, and sanctioning of the NIRA and NLRA acts)

    The former may lead to a trade war.

    The latter causing the forming of cartels, with subsequent price increases, and a steep increase in the percentage of organized labbor. (Which might be good for some purposes, but definitely is not the right medicine in the middle of a depression)

    I think the stock market is an extremely dangerous place to be right now. There is no such thing as a support level, so best keep a very short time horizon on your investments, for a long time to come. As someone else on this forum mentioned, stocks did not reach pre-29 levels before 1954. Now, that is a very long time horizon for most of us.

  • Report this Comment On November 08, 2008, at 9:13 AM, KauaiHawaiiGuy1 wrote:

    I am confident that neither the writer of this article or the opinion posters after are old enough to have lived through the great depression. It’s just history. What people actually remember and not just read about are the more recent recessions … early 70s, crash of 87, the 91, and the most recent, 2000 to 03 downturns. And because those bear markets were relatively short and the subsequent recoveries relatively swift, we have articles like the above “Best opportunity in 35 years” and others now putting forth the idea that buying the market now would be a wise decision.

    The problem I have with that premise is that it might be exactly right ….. or exactly wrong. There are no facts supporting an 8 or 9000 Dow bottom. During the last “real” depression the Dow Lost 90% before it started its long march back. And that march took 25 years. What we don’t know is whether this bear market will be like the more recent retrenchments, or like the great depression, or somewhere in between. 90% means a Dow 1400 and an S&P 150. Are you willing to bet the farm that we’re near bottom?

    Right now the Dow is behaving exactly like it did in 29 to 33. It lost 20 to 40% and then gained back 10 or 20% and then lost another 30 or 40% and then gained back 15 or 30%. Get the picture? It didn’t lose 90% over night ….. it took 3 years to do that. We’ve been falling now for one year. My decision for now is to sit on the sidelines. To be a wise investor means that you make your investing decisions based on facts not emotions. Right now nobody knows the facts, therefore investing at the present time is more akin to gambling than investing. If the market recovers quickly I could miss the boat. If the markets continue to slide I will be in a far better position in cash. You have to make your choice, and right now I only see two options. 1.) Lose your money fast in the market or. 2.) Lose your money slower to inflation. I’m going for option 2. Maybe that way when we finally do bottom I’ll still have some.

    Let’s not forget the old market adage “Don’t try and catch a falling knife”

  • Report this Comment On November 08, 2008, at 9:40 AM, ClothingOptional wrote:

    or 2a) Expose some of that cash to market risk and only miss out a little when it jumps, or lose a little when you figure out that you're "early"...

  • Report this Comment On November 08, 2008, at 12:21 PM, michaelstl wrote:

    Look at it this way. You have to look at a company as if you feel that it is time to own it. Are the prospects good enough to weather the storm and survive? Make sure it pays you a dividend that you feel is sound. Then you can get paid for waiting. Reinvest dividends if possible. People aren't going to stop living, eating, shoping, financing etc. Life will go on. Cycles will happen over and over again. Good companies will be there and weather the storm.

  • Report this Comment On November 08, 2008, at 3:08 PM, faithsloan wrote:

    We ain't at the bottom folks. That is my prediction and I am sticking to it.

    We are in a mess of trouble but I have 'long-term' confidence. We have to understand that there is a big difference between giving general advice to all when the majority of us are hurting in terms of available cash. The hurt ain't buying cuz they can't buy even if they are willing.

    Buffett should not be quoted so much because one of his pockets extends multiple pairs of pants. Who can touch him and follow his investment advice except for the general buy low / sell high? I can't!

    I am not hurting which is only a blessing from my Lord, Saviour and Intercessor. But I ain't throwing my cash down a big abyss at this time because it simply is not prudent. High Risk Low Returns is plain and simple ludicrousity. I'd much rather play the High Risk High Returns HYIP games found all across the internet. LOL

    God Bless

    Faith

    http://faithsloan.com

  • Report this Comment On November 08, 2008, at 3:47 PM, ForVanessa wrote:

    Buying up or down looking at least 20 years down the line at this point. There has been too much wealth lost to make things apparently stable at this point or in the near future. It won't be for me that I am buying now.

  • Report this Comment On November 08, 2008, at 10:08 PM, TMT33 wrote:

    the market will be 30% LOWER sometime in the next 6-9 months. That's when I'll be buying.

  • Report this Comment On November 09, 2008, at 1:33 PM, bulldogjr wrote:

    Market is obviously still to volatile for everyone but well-heeled gamblers. the jury is out on the new administration but the market reaction to the elections was not good. Two straight days of big losses before a mild rally late Friday. A lot is in limbo and still no one trusts no one. The credit crisis still looms and as one writer says, "it's not just a liquidity crisis - it is a solvency crisis for many - Ford, GM, Chrysler, banks, s&l's, insurance companies and lots of business who can't afford to float new capital offerings or borrow at the Bank. We are really paying for our sins of over indulgence, speculation and easy credit. Congress and our so-called leadership has failed us and there are no easy answers out there.

  • Report this Comment On November 12, 2008, at 5:49 PM, patjmp wrote:

    I have been buying stocks for the last couple of months at what I considered bargain prices. And of course in a few days that go lower yet. But I still believe the market will recover in a few years, and there is lots of money to be made. I'm one of the fortunate ones with no debt at all, and I do have cash available. My portfolio has fallen, my retirement account has fallen, but I still have faith in America. The economy will recover, it will just take time. How can you go wrong with Cat, CCl, Met, Rig, L, etc. This are great companies and they will recover and make money. Even AGI will recover. I wouldn't suggest borrowing to buy now, but if you have a little extra cash, invest for future profits.

  • Report this Comment On February 22, 2009, at 11:25 PM, matcha695 wrote:

    Berkshire Hathaway sold much more in stocks than it purchased last quarter.

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