Thursday, October 02, 2008

Can't wait to go shopping

The stock market is in turmoil and there is no better time to buy than when everybody is screaming ‘sell, sell, SELL!!!’

The question is when to buy and who. If I were god, I would be able to tell you exactly what time and day that is. But unfortunately I’m not, so let's just speculate...

Risk/volatility is pretty high right now. We’ve been seeing some major market rollercoasting based on announcements of the bailout plan. Obviously, a bailout will keep the market stable and no bailout will kill the market like wildfire. I think there will be at least some kind of bailout (nevertheless can be a half-baked one).
The proposed $700 billion bailout plan shows every sign that the leaders of America finally acknowledge the consequences of the crisis we're confronting. The stats below reflect this:

NASA budget for 2009: $17.6 billion, or 2.5 percent of the bailout sum.

National Science Foundation (NSF) annual budget: $6.06 billion (basically the fore-front of R&D throughout the nation’s universities)

Military operations and other activities associated with the war in Iraq (2003 through the end of fiscal year 2009 ): $606 billion

Social Security program (annually): $608 billion

I think I ought to have appetite for additional risk at this time of my life. But at the same time learning to play smart and get in when the market stables down (at the cost of when prices will not be as handsome anymore) seems more worthy. I think such discipline will be a great receipe for additional investing in the future.

I'm going to get in on the leaders of industries that were hit hardest by the crisis. Leaders ought to have better fundamentals. And since they were hit hard, potential to make up the valuation they once had is probably also best-est.

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