The stock market is in short-term disarray, but big buying opportunities are emerging for long-term investors.
We had just passed a solar farm -- acres and acres of solar cells pointed toward the hot Puglia sun -- when we hit a traffic jam. A shepherd and his two dogs were guiding about 100 sheep down the road, and that had stopped traffic -- all two cars of it.
Stocks' return over the long term
Italy makes you think in long runs of years. Here's a road that once connected Rome with Otranto, then the great eastern port of the empire, now a town where the dock area is an Italian version of Ocean City, Md. Here Domenico, our host for two weeks at the agriturismo Serra Gambetta near Bari, apologizes because his oldest olive trees -- still producing -- go back only 400 years. And in nearby Basilicata, cave houses built in soft cliffs for protection during the Middle Ages have been deserted by their peasant owners and are being reclaimed as shops and hotels.Msn.Video.createWidget('PlayerAd1Container', 'PlayerAd', 300, 213, {"configCsid": "MSNmoney", "configName": "player-money-articles-16x9", "player.vcq": "videoByUuids.aspx?uuids=2be0766b-0b19-4947-9b6e-c4eb5f324898,af1973e2-86aa-4cb6-817b-e935864a4f53,38685c17-945e-45c3-8838-e0e03050b650,58267a26-fc3e-4b94-8c4a-fcc0e56fc13a,4ed8cf1a-1cb3-4cd4-908f-14604745960c,58050507-2d9c-4d86-a94f-efa3c781c317,f1574d04-e3bb-4f15-aaac-35c2c9ac1f49,dc82d6d5-af22-1d83-db1e-95e991716479,80a1a6ed-321f-4d84-a7bd-4b6cbd2c45a8,233cbb41-9fb7-48e6-b9c5-15b9c84fdf9f", "player.fr": "iv2_en-us_money_article_16x9-Investing-JubaksJournal"}, 'PlayerAd1');Msn.Video.createWidget('Gallery4Container', 'Gallery', 304, 150, {"configCsid": "MSNmoney", "configName": "gallery-money-articles", "gallery.linkbackLocation": "bottom_left", "gallery.numColsGrid": "3", "gallery.categoryRequests": "videoByUuids.aspx?uuids=2be0766b-0b19-4947-9b6e-c4eb5f324898,af1973e2-86aa-4cb6-817b-e935864a4f53,38685c17-945e-45c3-8838-e0e03050b650,58267a26-fc3e-4b94-8c4a-fcc0e56fc13a,4ed8cf1a-1cb3-4cd4-908f-14604745960c,58050507-2d9c-4d86-a94f-efa3c781c317,f1574d04-e3bb-4f15-aaac-35c2c9ac1f49,dc82d6d5-af22-1d83-db1e-95e991716479,80a1a6ed-321f-4d84-a7bd-4b6cbd2c45a8,233cbb41-9fb7-48e6-b9c5-15b9c84fdf9f;videoByTag.aspx%3Ftag%3Dmoney_dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3Dbest%2520of%2520money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1"}, 'Gallery4');The perspective is useful in today's stock market.
No, I'm not going to preach some threadbare advice about investing for the long run. Nor am I going to tout the shares of an up-and-coming asteroid miner or of a vineyard on the slopes (the lower slopes) of Olympus Mons.
But I do think it's important to think about time in relation to the current market.Focused on the near future Right now, the stock market is hung up on the short term.
Will the U.S. economy slow significantly in the second half of 2010? Is the current slowdown in growth just a normal slump that happens during many recoveries when companies have finished rebuilding inventories that were drawn down during the recession? Is the decline in home prices near an end? Will companies start hiring by the end of the year?
Those are all important questions -- if you're trying to hit quarterly performance numbers or catch the exact bottom in the market.
But they're not so important if you're investing for five years or longer.
If you're investing in that kind of time frame, what you really want to know is which economies will outperform in the long run. You want to identify the growth industries of the next decade. You want to know where global demand is going to squeeze global supply. You want to know where the global financial power is ebbing and where it is flowing. Names for the longer term You can place your bets on the answers to those questions at reasonable prices right now. Companies such as Intel (INTC, news, msgs), Vale (VALE, news, msgs), HSBC (HBC, news, msgs) and Coach (COH, news, msgs) are all selling at low multiples given their probable growth rates -- and, especially for technology companies, even lower multiples once you subtract the big piles of cash that companies such as Intel and Cisco Systems (CSCO, news, msgs) have in the bank.
Some of the likely emerging-market leaders of the next 10 years look like they will pull back to reasonable prices in the weeks ahead (China's stocks already have). Companies such as Lan Airlines (LFL, news, msgs), Li & Fung (LFUGF, news, msgs), Cosan (CZZ, news, msgs) and HDFC Bank (HDB, news, msgs) aren't necessarily cheap based on current earnings, but the future frequently looks pricier than the present because it's so hard to value potential.
What you can't do at the moment is be sure that you won't be able to buy the stocks that you want in your portfolio for the long term at lower prices in two months or four or six. The fear is that after the big rally that began in March 2009 and stretched to April 2010, buying now is buying at a top. That worry has kept the market range-bound. Investors are looking for some guarantee that buying now isn't going to be like buying in December 1999, when the Nasdaq Composite Index ($COMPX) topped out the following March.
But there are no guarantees. If the future for every promising stock was guaranteed, the shares would sell at prices much higher than today's prices.
Continued: The raw truthMore from MSN Money and MoneyShow.com
China feels global-market painSurvey: Investors are really, really scaredAre China's banks in trouble?Jubak on video: Why stocks may lag in the coming monthsFannie and Freddie must dieJubak on video: Companies spending for better days ahead1 | 2 | next >
Rate this Article Click on one of the stars below to rate this article from 1 (lowest) to 5 (highest). LowThank you for rating.UGR('ratCntrl')High var avgRating=0;avgRating=6.904762; if(avgRating!=0){avgRating=avgRating/2;avgRating=Math.round(avgRating*100)/100;var sDisplayText="Average rating: " + avgRating + " from ";var usersCount=84;sDisplayText = sDisplayText + usersCount;if (usersCount==1)sDisplayText=sDisplayText + " user";else sDisplayText=sDisplayText + " users";avgRatingElem=document.getElementById("averageRating");avgRatingElem.innerText=sDisplayText;} View all top-rated articlesE-mail us your comments on this article Discuss in a message board Stock PicksJubak's PicksCheck out Jim's top stocks for the next 12 months.
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Connect with JimBecome a fan on FacebookSubscribe to his e-mail newsletterDecision CentersStart InvestingMutual FundsFind Hot StocksSimple StrategiesPower ToolsInvesting for IncomeReal Estate InvestingRecent Articles by Jim JubakChina feels global-market pain 08/12/2010Are China's banks in trouble? 08/09/20102 tests for Chinese giants 08/05/2010More...Jim's Most Recent Top Stocks PostsVale flexes its musclesHold the Big Mac and friesGetting to the bottom of the wheat crisisFund data provided by Morningstar, Inc. © 2009. All rights reserved.StockScouter data provided by Gradient Analytics, Inc.Quotes supplied by Interactive Data.MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.Msn.Video.createWidget('Gallery8Container', 'Gallery', 500, 230, {"configCsid": "MSNmoney", "configName": "gallery-money-article-site-wide"}, 'Gallery8');msft.msn._ic.cid='wafxpvjikinp9kcvbqba2yv0t0q77dvv';msft.msn._ic.pst=false;msft.msn._ic.pgn=1; Be the first to commentAdd a commentShow commentsSort by:Newest firstOldest first_uc2f12('iucGo');1 - 4 of 4PreviousNextwuyuanqihe #18/23/2010 8:34 PM
I'm just waiting for the price of bananas to go up when companies run out of humans & start hiring chimps. When will we all learn? When the chimps are running the companies? Too late for that?
ReplyReport Abusescammic #28/23/2010 9:31 PMTime is on investor side is an oxymoron for 80 to 90 yrs old in my opinion. LOL!ReplyReport AbuseChrisJO #38/23/2010 9:31 PMwuyuanqihe,Why would they hire chimps when they can get people for less? Sure the chimps might make better decisions, but this is about money not good decisions. ReplyReport Abuseruguoaia #48/24/2010 1:13 AMlooks pricier than the present because it's so hard to value potential.What you can't do at the moment is be sure that you won't be able to buy the stocks that you want in your portfolio for the long term at lower prices in two months or four or six>>>>Plane air Ticket $1<<<< >>>>Hotel Room $1<<<< >>>>Rental Car $1<<<<Fall Season Vacations-- Ideas for family fall vacation 2010==>Airplane Ticket $1 ==>Hotel Room $1 ==>Rental Car $1 ==>Cruise travel $1++++++>All are starting From $1 only===>Save On Last-minute Autumn Travel--- Vacation Packages Under $500ReplyReport Abuse1 - 4 of 4PreviousNext_ucf13('0'); _iuc2Om1('MSNPortalInlineComments','Initial_Load_Comment_View','http://articles.moneycentral.msn.com/Investing/JubaksJournal/time-is-on-investors-side.aspx?','en-us');Are you sure you want to delete this comment?Report AbusePlease help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.CategoriesSpam or advertisingChild pornography or exploitationProfanity, vulgarity or obscenityCopyright infringementHarassment or threatOtherAdditional comments(optional)100 character limit To add a comment, pleasesign-in/*MSN PrivacyLegalAdvertiseRSSHelpFeedbackSite mapAbout our ads© 2010 Microsoft/*No, I'm not going to preach some threadbare advice about investing for the long run. Nor am I going to tout the shares of an up-and-coming asteroid miner or of a vineyard on the slopes (the lower slopes) of Olympus Mons.
But I do think it's important to think about time in relation to the current market.Focused on the near future Right now, the stock market is hung up on the short term.
Will the U.S. economy slow significantly in the second half of 2010? Is the current slowdown in growth just a normal slump that happens during many recoveries when companies have finished rebuilding inventories that were drawn down during the recession? Is the decline in home prices near an end? Will companies start hiring by the end of the year?
Those are all important questions -- if you're trying to hit quarterly performance numbers or catch the exact bottom in the market.
But they're not so important if you're investing for five years or longer.
If you're investing in that kind of time frame, what you really want to know is which economies will outperform in the long run. You want to identify the growth industries of the next decade. You want to know where global demand is going to squeeze global supply. You want to know where the global financial power is ebbing and where it is flowing. Names for the longer term You can place your bets on the answers to those questions at reasonable prices right now. Companies such as Intel (INTC, news, msgs), Vale (VALE, news, msgs), HSBC (HBC, news, msgs) and Coach (COH, news, msgs) are all selling at low multiples given their probable growth rates -- and, especially for technology companies, even lower multiples once you subtract the big piles of cash that companies such as Intel and Cisco Systems (CSCO, news, msgs) have in the bank.
Some of the likely emerging-market leaders of the next 10 years look like they will pull back to reasonable prices in the weeks ahead (China's stocks already have). Companies such as Lan Airlines (LFL, news, msgs), Li & Fung (LFUGF, news, msgs), Cosan (CZZ, news, msgs) and HDFC Bank (HDB, news, msgs) aren't necessarily cheap based on current earnings, but the future frequently looks pricier than the present because it's so hard to value potential.
What you can't do at the moment is be sure that you won't be able to buy the stocks that you want in your portfolio for the long term at lower prices in two months or four or six. The fear is that after the big rally that began in March 2009 and stretched to April 2010, buying now is buying at a top. That worry has kept the market range-bound. Investors are looking for some guarantee that buying now isn't going to be like buying in December 1999, when the Nasdaq Composite Index ($COMPX) topped out the following March.
But there are no guarantees. If the future for every promising stock was guaranteed, the shares would sell at prices much higher than today's prices.
Continued: The raw truthMore from MSN Money and MoneyShow.com
1 | 2 | next >
Check out Jim's top stocks for the next 12 months.
Read how to invest with Jubak's showcase portfolio.
Follow the long-term portfolio from Jim's book "The Jubak Picks."
See Jim's new portfolio to help navigate the treacherous interest-rate environment.
I'm just waiting for the price of bananas to go up when companies run out of humans & start hiring chimps. When will we all learn? When the chimps are running the companies? Too late for that?
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