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Buy the Dip? "It's OK to Take on Some Risk," Says BCA's Martin Barnes
Posted Apr 06, 2009 03:21pm EDT by Aaron Task in InvestingUpdated from 3:21 p.m. EDT
Many investors viewed the recent rally as an opportunity to sell, and several exercised those beliefs on Monday morning. But what if the decline was a buying opportunity? Some investors apparently believed so as the Dow did rebound from its early low.
Update: After trading as low as 7862 intraday, the Dow recouped over 100 points of its decline to close down a relatively modest 0.5% at 7976.
Earlier: Martin Barnes, Managing Editor of The Bank Credit Analyst, believes investors smart enough or lucky enough to have been out of the market the past 18 months would be wise to "take on some risk at this point" based on the following:
- Overwhelming liquidity injection by global policymakers.
- Stock market P/E valuations below long-term average.
- Stocks cheap relative to Treasuries and cash.
Barnes is "not a great optimist" and believes many challenges remain. He is telling his subscribers, mostly institutional investors, corporations and high net worth individuals, to slowly ratchet up equity exposure.
"In a year or nine months you'll feel upset [and ask yourself] ‘why didn't I buy more stocks when they were giving them away at such low levels,'" he says.
28 Comments
- Monday April 06, 2009 03:30PM EDT
The American consumer is poorer now that the government has taken trillions from us to prop up banks that will pay bonuses in the hundreds of millions.
Yahoo! Finance User - Monday April 06, 2009 03:34PM EDT
Aaron - Did you have to follow this guy to the roof and convince him not to jump or were you two just taking a smoke break??
franck s - Monday April 06, 2009 03:44PM EDT
Yes, definitely take some risk, as long as you have a lead on when the next selloff will occur. But wait, that is not really risk...is it?
Crystal Protector - Monday April 06, 2009 03:45PM EDT
Buy Gold, commodity like oil and copper, not stock or Treasury bond. They can print stock, paper money or Treasure bond, as much as they want. But no one can create food and commodity out of thin air.
danny - Monday April 06, 2009 03:49PM EDT
I have been completely out of the market since oct 07. I am sitting on the sidelines earning 1 to 2 percent in a guaranteed interest income fund. I feel fortunate I have not lost 30 to 50 percent of my 401K. I keep looking at these sights for some good advice. I keep coming to the same conclusion. Opinions are like a$$holes, everyone has one. I will now try to do my own. Wish me luck!
Go - Monday April 06, 2009 03:52PM EDT
Bullish commentators never seem to discuss toxic assets.
Tom - Monday April 06, 2009 04:04PM EDT
That's funny! JUMP JUMP JUMP!!! I never would have thought of Aaron Trask bringing the Financiers to the roof of the Waldoff to Go OVER THE EDGE DOWN Down down...Splat...finding a floor...Totally depressed splat already!!!
Tom - Monday April 06, 2009 04:05PM EDT
That's funny! JUMP JUMP JUMP!!! I never would have thought of Aaron Trask bringing the Financiers to the roof of the Waldoff to Go OVER THE EDGE DOWN Down down...Splat...finding a floor...Totally depressed splat already!!!
Yahoo! Finance User - Monday April 06, 2009 04:06PM EDT
It's not done going down. I know. I still have a job.
Kent - Monday April 06, 2009 04:06PM EDT
Diryan3- Glad someone made the right moves. I have recovered some 10% after my lows. Not a lot but it's a start! Good luck to you---
Yahoo! Finance User - Monday April 06, 2009 04:16PM EDT
You'll know when "we find a floor". It will really hurt. 40% is "merely a flesh wound" of a correction. Wait for the concrete floor.
Yahoo! Finance User - Monday April 06, 2009 04:26PM EDT
I've been "conned" by more people in suits than people in blue jeans.
__A_YAHOO_USER__ - Monday April 06, 2009 04:35PM EDT
Why didn't I buy canned foods and solar panels when they were still on the shelves??? And why didn't I marry the Chinese chick who was 97 pounds and lived on rice, yet F'd like a bunny when I had her all broken in? Oh... whoa is me!!!
Yahoo! Finance User - Monday April 06, 2009 05:27PM EDT
You need to have toes in the water
Yahoo! Finance User - Monday April 06, 2009 05:51PM EDT
Ha ha ha...if history is any indicator, we are about half-way done with this Bear. See www.BearMarketComparison.com.
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Yahoo! Finance User - Monday April 06, 2009 03:28PM EDT
Something of an understatement:"In a year or nine months you'll feel upset [and ask yourself] ‘why didn't I buy more stocks when they were giving them away at such low levels,'" he says.