There are so many great moments in advertising. One of my favorites of all time is the 1970’s ad for Heinz Ketchup (HNZ). The simple image of a bottle reluctantly releasing its goods, combined with a catchy tune made for a marketing campaign, resonates to this day. I suspect many of you are humming the tune now as you read this.
Anticipation, it’s making me wait…
Just like the Heinz commercial, we’re all waiting with anticipation with regard to the stock market. In fact, we are so close to a bottom with respect to the current stock market malaise (see, “Where Oh Where Is the Bottom?”) Capitulation is a good word for it, and we are going through that process now. Investors preparing for the rebound today will be rewarded handsomely.
Now Is the Time to Buy
I apologize if I may seem cavalier in the face of extreme anxiety in the markets. No doubt times are tough, but when times are tough, the tough get going!
Frankly, many investors should have been prepared for what has transpired. The playbook at the end of a business cycle is fairly clear. Get defensive, buy commodities and sit back, and wait for the next cycle to begin. (By the way, if you are looking for ways to cash-in on the commodity gold rush, download a free copy of “Commodities: Your Free Guide to Profiting Smartly”)
When we have enough decimation in the market, we can start buying selective stocks or sectors that have been crushed as a result of slowing growth, recession and inflation. Astute investors are buyers at these moments when things seem to be at their worst.
Battered Banks Are a Good Bet
Take a look at the battered banking sector. I recently mentioned this group as a place to find value in, “The Doctor is in: Your Midyear Portfolio Checkup.” Those bargains are getting better by the day! And I couldn’t be more pleased. One sign that I really like to see is insiders—like chairmen and CEOs—buying their stock.
One manager who has done very well buying and selling his stock is…> Wells Fargo (WFC) Chairman, Richard Kovacevich who bought over $1 million of his stock at just over $26 per share. WFC President, John Stumpf did some buying at $29 per share.
With the stock now at approximately $24, these buyers are losing money, but keep in mind the buying was done for the long term.
Over at TCF Financial Corporation (TCB), former Chief Executive and Chairman William Cooper put $2 million into TCB stock last month at prices ranging in the high teens. With TCB now at $12 per share, Cooper is way down on his purchases.
Follow the Leaders
Given that timing the exact bottom is impossible, I would contend that following the lead of astute insiders is a good strategy to follow. These leaders understand that banks (in normal environments) are reliable moneymakers.
Taking advantage of the mess and the subsequent cleansing is a wise rational strategy. With prices even lower today, buying now could result in even better returns down the road.
Anticipation, it’s making me wait…
Confidence will be restored to the housing market, and banks will not just survive; they’ll be more profitable than ever! This housing cycle’s intense fear and panic has created a major opportunity for investors. Banks are on their way back–and it’s time to buy them!
“Be bold and plan for the inevitable recovery! Demand for mortgage-backed securities and bank stocks will soar.” Those are the words straight from the mouth of John Dessauer, editor of Investor’s World, whose 30 years of practical, hands-on, global-oriented investing expertise has made thousands of his subscribers better off. John Dessauer not only believes that banks will survive this economic downturn…they’ll thrive once it’s over! For the last 25 years, John Dessauer’s Investor’s World has averaged an impressive 12.1% returns per year through good times and bad! Click here to get the names of the names of the banks he’s betting on with a risk-free subscription!
