October 17, 2008, 6:00 am

Opportunity of a lifetime?

by: The Financial Blogger    Category: Investment, Market and Risk,Trading
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No doubt about it, in 20 years, you will probably still be talking about 2008, about how you were there, every day, witnessing a truly unique scene, one where fundamentals of investing changed. Indeed, how is it possible to invest in markets where governments are getting involved with billions of dollars.

Want to invest on an index and be on the other side of some decision made by the Fed, as well as the other major central banks of the world? Many fund managers are starting to get ready for what might be the best investment opportunity of a lifetime. And while generally, stock picking is something very difficult for beginners to do, this time it might actually be worth taking a look.



Over the past few weeks, markets have gone through so many irrational movements, movements motivated by fear but not by any logic, that some major price distortions have occurred. Simply by looking at Price/Earnings ratio, you can find a few bargains.

For example.. sure Oil has been going down in prices in an important manner and you might not probably look at companies involved in oil as a primary place to invest your funds. But what if I told you that Royal Dutch Shell (RDS.A) is now trading at a 4.16 P/E ratio? Crazy isn’t it? Sure, their upcoming earnings are expected to decrease but analysts still expect a 9 P/E ration for next year! If you wish to avoid industries like oil or financials, even CBS (TV network) is now trading at a 4.77 ratio!

Another company that is very famous but might be worth a look is Microsoft (MSFT). It currently trades at 24$, over 33% down from its 52 week high. Now I know the economy is struggling but I think Microsoft is in a perfect situation to profit from it. Firstly, Microsoft sells a product that few people will not buy, no matter how the economy fares. As people and corporations need to upgrade their PC’s, they will be buying Windows, it is not really considered a luxury now is it? Second, Microsoft has A LOT of cash. Enough cash to make a few good buys. Consider this.. Microsoft was willing to buy Yahoo! A few months ago for about 30$ a share while it could now buy it for almost half….

So I would say that if you are lucky enough to have cash to invest right now, try to look for the best investment opportunities. It might not double overnight and might even decline for a few weeks or months, but it’s probably not a good idea to look for the exact bottom in this market as it’ll be too late anyway once we know when that happened.

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Comments

I hope you are right. I bought SSO (double the S&P500 ETF) in my IRA this week.

by: The Financial Blogger | October 17th, 2008 (6:47 am)

Alex,
I hope I am right too 😉 hehehe!

You views are sharp. My thoughts are pretty in-line with yours. I’d shared similar views on my blog recently too @ http://leroyang.blogspot.com/2008/10/have-faith-stay-invested.html.

If we REALLY believe that this is the opportunity of our lifetime, our creativity should be able to tell us how to “create” money to capitalise on this opportunity. I am currently reviewing and re-aligning my portfolio to capitalise on the current opportunity. 😉

Over my end of the world, I am surround by many, who are whinning about the “fact” of no cash or not enough cash to capitalise on the opportunity. Not sure if your side is the same. I wish this group well, work hard, and save sufficiently for their retirement nest.

Cheers!
Leroy
Blogsite: http://www.leroyang.blogspot.com

You have made a very important point.

Each time the markets crash, people look at the negatives and all we see is the end of the world scenario.

Careful and smart investing now should pay off handsomely.