Now Is the Safest Time to Buy Stocks

Unless you've been living under a rock -- check that, several rocks -- you know what I'm about to tell you: Stock markets worldwide are down substantially this year. Here's a representative update on the carnage:

Data through 10/24/08.

While you'll hear some talking heads on TV tell you this is a "once-in-a-lifetime" event, the fact of the matter is that these returns resemble what we saw year to date around this time in 2002 ... just six years ago. Take a look:

Data from 1/1/02 through 10/24/02.

Yes, it's worse this year, but it's not that much worse (and China, for its part, was not as hugely overvalued at the beginning of 2002 as it was at the beginning of 2008).

Now for some context
Knowing that, let's take a look at how stocks in these countries have performed from Oct. 24, 2002, through today.

Despite all the talk of financial calamity, most of us are basically where we were six years ago. That's not good, of course, but it's also not the end of the world. Incidentally, if you've owned Brazil for the long term, you've improved your lot in life quite a bit.

What this means for you
All of this is to say that the safest time to buy stocks is not when the market is optimistic, but when it's extraordinarily pessimistic. That was the case in October 2002, and if you bought then, you got in at such low valuations that the current crisis -- a crisis that has cost trillions in wealth, taken down several major investment banks, and garnered extra-large headlines around the world -- has merely returned you to your original cost basis.

That's not to say we're taking these events lightly here at The Motley Fool. Instead, our goal is to help more individual investors understand that this is not the time to run terrified into cash, but actually an attractive time to put money to work around the world.

The key, however, is to know your facts.

Just the facts, ma'am
When you know your facts about an investment, you're able to see through the market panic, forced selling, and all the rest, and see a company that you'd like to own for the next 10 years or more. And companies like this exist in every country in the world.

Take Intel (NASDAQ:INTC), for example. I'm not normally a U.S. large-cap guy, but I keep hearing the name mentioned by investors I respect. The California-based chip maker has dropped nearly 50% year to date, and according to my calculations, it's now being valued as though it will never exceed 5% annual growth ever again. Yet what we know about Intel is that its products remain in high demand, and it has $10 billion in net cash, a crack R&D team, and a decades-long track record for operational excellence.

If we stay in a global recession forever and Intel never exceeds 5% growth ever again, then at today's prices, you're paying fair value and getting a 4% dividend. If it does better than that thanks to newer, cheaper chips that are included in products sold by top names such as Dell (NASDAQ:DELL), Apple (NASDAQ:AAPL), Hewlett-Packard (NYSE:HPQ), and many more, then you're going to make pretty good money. Those are the facts.

More facts
Go south to Argentina and you'll find Cresud (NASDAQ:CRESY), an agricultural company that, according to our calculations at Motley Fool Global Gains, is being valued as though its farmland is worth just $45 per acre. For comparison, farmland here in the States can sell for thousands of dollars per acre.

Similarly, two of our top emerging-markets telecom picks -- Turkcell (NYSE:TKC) and Telkom Indonesia (NYSE:TLK) -- are priced for 3% and 4% growth, respectively, despite the fact that both countries should have GDP growth rates that exceed those numbers in the near term and that Indonesia currently has a cell-phone penetration rate of just 40%.

Here's what you can do about it
Indeed, expectations for stocks around the world are low, and that's what makes now -- despite all of the ominous headlines -- the safest time to invest.

At Global Gains, we're recommending that investors take particular advantage of the panic to increase their exposure to previously premium-priced overseas stocks. By doing so, we expect you to improve your returns and achieve greater diversification.

After all, remember what a little Brazil would have done for you between 2002 and today.

To take a look at all of our top international stock picks for new money now, click here to join us at Global Gains free for 30 days. There is no obligation to subscribe.

Tim Hanson is a Motley Fool Global Gains analyst. He owns shares of Cresud. Cresud, Turkcell, and Telkom Indonesia are Global Gains recommendations. Telkom Indonesia is also an Income Investor choice. Intel and Dell are Motley Fool Inside Value recommendations. Apple is a Stock Advisor pick. The Fool's disclosure policy stands by this article.