Looking for a Value Based Buying Opportunity

With earnings season once again around the corner, this perspective on the market has extra relevance:

Source: Decision Point

Once in a blue moon, the market trades at prices which take it to a “value based buying opportunity”. But notice that looking back, it hasn’t for a long time. According to this chart, if we do revisit that scenario again, we would be at levels last seen in 1996 (S&P 500 ~650).

Which reminds me of this other chart, showing just how low a serious bear market can take prices.

Comments

[Smarty_Pants:]

True. Just find that one stock with:

P/E around 5
Dividend payment of at least 5%
Zero debt, as in none.
Growing revenues and profits in an expanding field.

It's a keeper. Of course if you wait it might become a better bargain later.

2008 Oct 09 03:21 PM

[Smarty_Pants:]

401-KEG Plan

If you had purchased $1000 of Delta Airlines stock one year ago, you would have $49 today.

If you had purchased $1000 of AIG stock one year ago, you would have $33 today.

If you had purchased $1000 of Lehman Brothers stock one year ago, you will have $0 today.

However, if you had purchased $1000 worth of beer one year ago, drank all the beer, then turned in the aluminum cans for recycling, you would have received $214 today at redemptions.

Based on the above, the best current investment plan is to drink heavily and recycle.

2008 Oct 09 03:51 PM