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For the past few weeks the stock market has been volatile and the "I told you so bears" are coming out in droves to pat themselves on the back. Well, I'm not a stock market bull but I think they are full of it!The market would still be up if not for the black swans popping up all over. The disaster befalling the Europeans under mountains of debt, plus the oil spill in the Gulf of Mexico running unabated, added to the colossal pending legislation to rein in Wall Street at the same time that Goldman Sachs has been threatened by the SEC and the DOJ is leaning on the rest of the street has given those already looking to make their exit plenty of reasons. However, it is not the over all economy that is the reason; that continues to improve.
It is certainly true that the market has been on an unprecedented run until recently but that is because it followed a once in 80 year nightmare and things got oversold. While I would agree that the pendulum may have over swung the market again to the high side there were plenty of bargains remaining and there are more now.
When folks ask me if I think the market is overvalued my usual response is don't even think about it and focus on individual stocks. This week one of my real estate associates Stacey V., playing contrarian, emailed me with a request for safe bets in this down market where he might invest a few thousand dollars during all the uproar.
My respsonse:
- If I had 3k I would buy Sysco (SYY) the food delivery company. They have 15% of the US market, and growing. They have no known exposure to Greek bonds or the Euro. A weaker global economy means lower oil prices which is one of their biggest costs, improving their bottom line. It's a hold forever stock paying a 3.4% yield which they raise annually and it will be wonderful for your eventual retirement income. I own it in my personal account, Roth IRA and my investment company.
- A second possibility is the Southern Co. (SO) a growing utility that has raised its dividends for 48 years, now paying 5.28%. I own it in all of my portfolio's and bought it for my mother-in-law and three kids too. Like I said I only discuss things I would do.
- A third idea is the Olin Co. (OLN) that is the third largest manufacturer of bleach and first in ammunition. They bought the Winchester Co. 76 years ago. It is trading around 18 and they pay a 4.09% yield. Good luck -- and I can't make you rich. You will have to do that yourself.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: He is an active investor trading stocks and options; at the time of this post he did own shares of OLN, SO, and SYY.
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Reader Comments (Page 1 of 1)
5-24-2010 @ 4:41AM
habika said...
The market would still be up if not for the black swans popping up all over. The disaster befalling the Europeans under mountains of debt, plus the oil spill in the Gulf of Mexico running unabated, added to the colossal pending legislation to rein in Wall Street at the same time that Goldman Sachs has been threatened by the SEC and the DOJ is leaning on the rest of the street has given those already looking to make their exit plenty of reasons.
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