Cheer Up My Friends!

The Republicans might be raining on our Democratic parade but there is a silver lining glowing brightly. As I predicted, the stock market has totally tanked (The S&P is down over 14% right now). This has really torn the ass out of what few investments I have, but that’s life. What it means, however, is that there has never been a better time to invest than right now. It’s not easy to think like this when every fiber of your being is screaming RUN! But now is the time to buy.

The market will likely sink further for the next several weeks, and since you can’t time the market we are now close enough to the “bottom” to buy some stocks at bargain prices (either now or on the way back up)… So, where are the Blue Light Specials right now? EVERYWHERE. In no particular order, here’s my top five list of stocks that I would buy (or buy more of) if I had they money:

Corning Inc. (GLW). Corning has just tanked BIG TIME. Corning is a large cap with a great balance sheet. Because there is currently a glut of HDTV screens they took a hit is sales and when they released this info their stock dropped from like $21 per share to $16.69 in about two days. Corning also pays a dividend of 1.2% that you can reinvest so it’s a gift that keeps on giving. Sadly I bought some at $19.98 recently… Although sad, this isn’t bad, I’m just greedy right now even at $20 this stock is a steal. I think this is a company worth at least $10 per share more that it’s going rate right now… And, they just developed a way to manufacture solar panels at half the price. This is a no brainer.

Lloyds TSB Group (LYG). This is an English bank. That’s right, a bank! In this time of banking meltdowns why would I select a bank? I chose Lloyds because they are a solid company with an exceptional balance sheet and their share price at $20.37 (because of the current crisis) is an absolute steal! People are fearful of banks right now and that’s wise… But this bank isn’t a lemon, it’s the cream of the crop, a strong company that pays a fantastic dividend of 8.85%. It will likely fall lower… But not to worry, next year this stock could be selling for twice the price! Reinvest the dividends and watch your position grow.

Jacobs Engineering Group (JEC). This stock is $64.57 a share… I wish I had the money to buy some though because this is rock bottom for a company that has hit $103.29 in the last 12 months and will likely beat that next year as they just got a global construction contract according to Barrons. I want this stock SO badly for myself… I hope that at least one of my readers has enough cash to buy a few shares and makes a killing!

On Semiconductor (ONNN). Here’s a small cap stock that has a five-star rating from S&P, and it only costs $8.26 per share! On has tremendous growth potential and very good fundamentals. It’s a well run company and I have a 60-day limit order set to purchase it if it hits a lower price. I have a very good feeling about On and so do a lot of other investors.

Sigma Designs Inc. (SIGM). Sigma is another small cap just waiting for the economy to turn. They make the video chips that go into HDTVs, Blue Ray DVD players, and for Internet video applications. This stock is currently selling for $15.47/per but has reached $73 a share within the last year! As soon and the economy picks up later next year or in say, 18 months… This stock is gong to skyrocket! 20 years ago people may have wanted their MTV, but now people want their HDTV. Sigma is a very strong company with a P/E Ratio of 6.4x, (under 14 is good) it’s a screaming BUY!!! I have a 60-day limit order set on this as well… I want my Sigma!

Although not a financial analyst, I do have an E*Trade account and scrutinize securities. Although no purchase of stocks is a sure thing, I believe that these stocks are as close as possible to the ideal. It might take a year or two to see any significant gains but these are good companies that should pay off handsomely in the long term… And you don’t want to hold stocks for less than 366 days anyway because of the short-term capital gains tax.

Bonus: If you want to setup an IRA (I recommend a ROTH) choose Vanguard. They have very low management fees and have a great track record.

Be well my friends and I wish you much success with your investments.

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~ by Woeful on September 6, 2008.

7 Responses to “Cheer Up My Friends!”

  1. Thanks for the tips. I’m a graphic designer and work for a major investment bank in New York City. Everyone there has the blue blues. These days, it feels like working in a morgue! It’s all about the long haul.

  2. Thanks for commenting!

    I pour over the financial news and analysts ratings when things get ugly… And like you wrote things are VERY ugly right now, especially the last few weeks. In fact, I recently bought into the Vanguard Emerging Markets Fund and talk about catching a falling knife… I’m not worried though, in fact I’m counting on it (sounds weird but that’s they way to be). It just means that these prices are real bargains.

    So, are my suggestions going to make you a millionaire overnight – NO. But if you have 5-10 years or are investing for retirement (20-30 years) these stocks are going to give you some serious coin over the long haul, especially if you reinvest the dividends.

    Ask your coworkers in the investment banking business about my selections… I’m confident that these are such good companies at such good prices that they’re great investment opportunities (even if you buy and the fall in price, and they probably will, it will only be for the short term).

    I recommend opening an E*Trade account. Their fees are reasonable ($12.99/trade), and they have special offers for the first year of service like 100 free trades. They even have an online savings account that pays 3.3% interest. That’s better than a lot of CDs right now. Lastly, E*Trade also has AWESOME analytical tools to fool around with! Very cool stuff.

    Bonus! Here are five more companies worth a look:
    Accenture (ACN)
    Diageo (DEO) – I love that Johnny Walker!
    Metalico (MEA)
    Old Dominion Freight Lines (ODFL)
    Overhill Farms (ODFL)

  3. Woeful, a man of a myriad of talents! Thanks for the tips, I like to play with stocks every now and then, but I’m more of a “day trader.”

  4. I do have a question, if it’s not too personal. On average, how many shares do you buy? I know it probably depends on the price but I wonder if you have a minimum? For example, how many shares of JEC would you buy in order for you to feel it is worth your while?

  5. I don’t do the day trader sell short gambling thing. I’m an investor, I go for the long haul. Depending on the stock and my finances I usually buy either $500, or $1000 of shares and I set a limit price lower than the going rate and see what happens. When the market tanks, it’s time to buy. When the Bull is roaring it’s time to go way easier, but always keep investing in an IRA or 401k no matter what to get the dollar cost averaging thing happening.

    Now, for young investors in their 20’s I would say try to invest at least $200 in a solid company. As Warren Buffet says, buying a great company at a fair price is always better than buying a fair company at a great price. Everyone has to start somewhere, and over the long haul (decades) even that $200 can turn into something significant especially with a stock that pays dividends that get reinvested. That said, for you really young people out there, students or people just starting out after school $100 is a good start, something is better than nothing…

  6. Thanks for the advice, Woeful. It’s hard to fight one’s impulses to pull a gingerbread man and RUN RUN AS FAST AS YOU CAN!

  7. You’re young baby! The best advice I ever got from a very smart businessman was, “Take more risks” when you’re young. I have 30 years or so to fuck up, so I’m not worried… And if you invest in great companies 30 years is going to produce like crazy.

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