Tuesday, July 8, 2008

Now Is a Fantastic Time to Be a Value Investor


The Dow Jones Industrial Average reached its yearly low yesterday. The S&P 500 and Nasdaq are each down a minimum of 12% year to date, too -- and we're talking about broad-market indexes, including Bursa.

Now is a fantastic time to be a value investor. Really. With stocks so widely sold off, and with pessimism so pervasive, you should make like a bargain shopper and pick out a few of the values that seem to be screaming, "Buy me!"

Of course, it is always difficult to believe that stocks could possibly go up when every day they seem to edge lower. We're human, after all, and a constant downward spiral brings an overwhelming sense of loss and makes us remember prior market crashes, like the Nasdaq bubble at the beginning of this decade or the Black Monday Crash of '87. But if those memories make you want to shun the market, sell your stocks, and move to "safer" investments, let me be blunt: That's a recipe for disaster. The market crashes I alluded to before -- dot-coms and Black Monday -- were actually fantastic times to be net buyers of stocks. So although it may seem tough in today's chaos, now's the time to go shopping, because there are many superior companies trading at discount prices.

Citigroup recommends investor to buy shares in plantation, bank, telecommunications and property. "The market is trading at 11 times of next year's earnings after a 25 per cent fall this year. It looks very attractive. But no one looks at valuation now unless there is improvement on politics," he said. The broker has turned more bullish on Malaysia as it was convinced that recent policies, including the cut in petrol subsidy and the rise in power tariff are setting the country on the right path.

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