Bloomberg is out with a special report detailing how cheap stocks are on a historical basis. With the slide we had into the end of 2007, the stock market now provides investors with the cheapest valuations in 30 years.
Some interesting morsels:
- "Telephone company stocks became the least expensive group in the MSCI World Index compared with the cash they produced."
- "A majority of Japan's companies trade at less than half their net assets as profits and wages contract in the world's second-largest economy."
- " Stocks fell to the lowest last month relative to bonds since the 1970s, according to the so-called Fed model, which was cited by former Federal Reserve Chairman Alan Greenspan a decade ago."
- The last time the spread was wider, equities outperformed debt by 24 percentage points in the next 12 months, according to Lehman Brothers, as cited by Bloomberg.
- Japan is the first of the world's 10 biggest stock markets to enter a bear market.
- "Japan is the only developed country left where you have what I would call Benjamin Graham-type stocks," said an asset manager interviewed by Bloomberg.
So, where does this leave investors?
Bloomberg suggests investing in real estate firms in Japan. The media firm says some investors are looking for shares of companies with property holdings in Tokyo, specifically because commercial land prices are rising for the first time in 16 years and office vacancies are falling to the lowest in at least six years.
Other investors are scooping up shares of telecom companies. Some of these firms, like AT&T (NYSE: T), are continuing to share out their cash flow with investors in the form of increased dividends.
In uncertain times, there's nothing like a (semi) certain dividend to inspire investor confidence.
Zack Miller the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author holds no positions in stocks mentioned.
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Reader Comments (Page 1 of 1)
1-06-2008 @ 11:49PM
wily said...
Buying stocks because you think they have hit bottom...bad idea...real bad idea