Where to put your money…

In these turbulent times, blanketed by uncertainty, investors are scratching their heads on which assets they should invest in. We hear terms like recession, slowdown, crisis, correction, bottoming out, and capitulation on a daily basis that adds to the mass confusion in the market. Volatility tells the tale; the parity of high-to-low for the week was over 700 points on the Dow Jones Industrial Average. With the impending Q4 GDP and consumer confidence numbers; along with durable goods orders, PCE, and new home sales, it proves to be another volatile week. Moreover, [in the short-term] I see further weakness in the major indices, the dollar, and certain commodities due to; poor economic numbers, the uncertainty of the credit crisis, the continuing deterioration of the housing market, and further Fed action.

So where should you put your money in these volatile times..?

With compressed valuations averaging 14-16x in the market and dividend yields on 40% of the S&P greater than treasury yields, there is great value in [many] individual stocks. These stocks, for whatever reason, that have been beaten up and oversold irrationally in the marketplace. Investors have to develop “screeners” containing specific variables in order to generate stocks that are undervalued and a good buy.

Stock screeners could include variable such as:
1. Favorable Price-Book Ratio
2. Low P/E Ratio (within the respective industry)
3. Lots of Cash on hand
4. Low to virtually no debt
5. High ROA
6. No exposure to sub-prime securities
7. Pays a Dividend

It should be noted that meeting all criteria is close to impossible, especially in large cap stocks. The combination of points and the range within each depends on your own personal preferences. Essentially, when using a guideline the stock/s in question should meet [as many] points as possible. It goes without saying that the more criteria met-the better.

There are great values in the market; all you have to do is find them.
Good hunting...