Yoshikami: Is It Time to Sell or Go Bargain Hunting?
Founder and Chairman of the DWM Investment Committee at Destination Wealth Management.
Panic! Time to sell?
No! Let’s face it. The world is in a state of panic right now. The news is bad and has been for a while. Even China's admitting that their migrant labor force can’t find work.
The US economy is soft and is in recession. The entire world is reeling from over-consumption and deleveraging. Time to sell, right?
No! Now is the time to look around at the carnage and find assets that are fairly priced, perhaps pay dividends and are positioned for a rebound. Believe me, the rebound is coming.
Valuations as measured by expected earnings that look interesting. Though the news is bad today, it always is when times are challenging. One simply needs to look at the headlines that blared disaster during the heart of every economic downturn -- it's still happening right now.
What companies are ripe for the picking? Look at names that have been beaten down as if there will be no recovery. Look at firms that maintain resilient earnings in growing markets. Here are a few:
- General Electric : Power infrastructure and finance
- Nokia : Cheap provider of cell phones
- Pfizer : A survivor in a growing segment despite expiring patents
- McDonald’s : Chinese expansion and priced right for tough times
- Nvidia : Faster graphics for a gaming world
- USB: A cheap bank with diligent management
What do these names have in common? Brand. Cash flow. International presence. Tailwind industries. Relatively cheap valuations. In most cases, dividends. And all positioned to benefit from challenges competitors will face.
Great names all reeling from an unprecedented downturn. But these names, and others like it, will recover when the economy starts to turn. Don’t be on the sidelines at the near bottom of a hard correction. The only thing worse that experiencing a downturn, is not participating in an upswing. Don't miss the boat.
Take action. Look at the carnage and buy cheap. Opportunity is right there waiting to be captured.
Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). Michael oversees all investment and research activities of the firm and has over 20 years investment and financial planning experience. Michael is a respected lecturer speaking frequently on tactical asset allocation theory and appears regularly on CNBC and CNBC Asia. Michael can be reached directly at firstname.lastname@example.org.