Wednesday, June 30, 2010

Time to Start Being Greedy

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett
The economy continues to face headwinds, but after a 15%+ drop in the market, it's beginning to look undervalued. As people pile into 10-year note causing its yields to reach levels not seen since the Lehman Brothers collapse, the S&P 500 is now trading at only 11.5x 2011 estimates. The market could continue to drop as pessimism reigns, but I would start accumulating quality names like Coke, Kraft, Google, Microsoft, Apple, GE, Nike, Wells Fargo, etc as these stocks reach valuation levels below the doldrums of 2008 and 2009.
I believe Oracle gave the market a good sign last week that while there are definitely problems in the global economy, companies will continue to show growth albeit at a slower pace. This is in contrast to the market being priced at a 25% discount to 2011 S&P500 expected earnings and 10-year note yields at depression-like levels
It's time to start being greedy.

Monday, June 28, 2010

Instant Gratification

With the wild swings in the market lately, and the constant mention that long-term investing is dead, I thought this article from Doug Kass summarizes things pretty well.

Kass: How Are You Doing This Month?