The stock market continues to drop, but I am extremely optimistic. I'm not sure we are at the end of the downfall, but for the first time in months I feel the market is no longer overvalued. What that means is that it is a great time to start putting money into the market.
I don't think this a time for willy-nilly investing, but for someone willing to put in the time to research mutual funds and individual companies it could prove to be a very good time to buy. At the moment I would continue to avoid the financial sector as well as airlines and automakers. As always I remain bullish on Berkshire Hathaway. Obviously I don't have the money to purchase any Berkshire A shares, but the B shares are trading below $3500, something that hasn't happened since September of 06. The drop in the price is a reflection of the market as a whole which has beaten down many stocks that continue to have very good balance sheets.
Nike is another company that has been beaten down. Nike currently trades at 12.5 times earnings. This is still higher than the industry PE of 11, but Nike carries a lot more goodwill than every other shoe manufacturer. Nike will probably suffer with sales in the near future, but the longterm outlook is still great. Other footwear companies come and go, but Nike is always around and it's cheap as a result of the recession.
There are some people who are looking to put money into green energy companies. I don't recommend it. A lot of these companies are like the internet companies of the late 90's. Some of them are going to get the big break and make a lot of people very rich, but a lot of them will never make any real money. Picking the next Microsoft or Wal Mart is easier done in Vegas than on Wall Street, but getting in on a good company after you've seen that they can make some money is still pretty lucrative especially if you can avoid investing in Kozmo.com thinking it will challenge Amazon because it has some flashy commercials. My advice; wait a few years to see where energy is going before putting any money there.
Subscribe to:
Post Comments (Atom)
1 comment:
Before any of you faithful readers tell me about my good call on Berkshire considering it is down 6% already today, I must say that I am excited to see it drop. The cheaper it gets the more I can buy.
Faithful readers? I am the only faithful reader.
Post a Comment