With trouble comes opportunity

Things look pretty grim out there right now.

Credit markets are freezing up. Unemployment is climbing. Housing sales, both existing and new, are hitting new lows. Orders for durable goods are down signficantly.

Our government has helped bail out 3 of the 5 largest investment banks. Fannie Mae and Freddie Mac, upon which the housing market depends so much, are in our government’s conservatorship. The largest insurance company in the world, AIG, has sold itself to our government’s majority ownership. Washington Mutual, the largest thrift bank in our nation, was siezed last night and parts were sold off to JPMorgan.

The U.S. executive and legislative branches are struggling to put together a multi-billion dollar plan (the bill will probably come to over a trillion, in my opinion) that will allow the government to purchase and liquidate currently illiquid securities. The Securities and Exchange Commission is preventing a growing number of companies from being sold short.

Baby, it’s cold outside.

So, where are the opportunities? Let me tell you!

The only thing building up faster than the credit market “snow” outside: bargains! I’ve never seen so many great quality companies selling at cheap prices. And, best of all, the strongest companies are able to grow while weak companies are wallowing in too much debt.

It’s always hard to buy when things look bleak, because they almost always seem to get bleaker. But, that shouldn’t prevent a long term investor from taking advantage of the great opportunities available right now.

It’s hard to remember how things looked in the fall of 2002 and spring of 2003. It’s hard to remember how bad the market and economy looked in the fall of 1990 and spring of 1991. It’s hard to remember the brutal recession of 1982 that followed a recession in late 1979 and early 1980. Same for 1974 and 1970, and on back in history.

The best time to invest is when things look terrible! That doesn’t mean we are at a bottom in the stock market–no one can predict that with any degree of accuracy. But buying when things look terrible has been a pretty good method to use over time, and now looks pretty dreadful.

With touble comes opportunity. This is an outstanding time to invest, and I will be glad to point back to this point in time several years from now and say, “wasn’t that a GREAT time to invest!”
Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.

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