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Everybody loves a bargain and the markets are full of them



By Dian Vujovich

Time to start looking at that stock wish list. After all, that’s what the smart money does when markets tank.

Nobody in the world knows how the markets will perform tomorrow or the day after. Or, the day after that. But the wise ones do know that a falling market provides buying opportunities. So if you happen to think that say Apple was a buy at 396, you’ve gotta love it at today’s close of around $364. The same is true for dozens of other companies.

As for the precise time to buy, only the Genie knows for sure and her style is to say, “Told you so!” after the market has bottomed and started to move ahead.

But we do know a couple of things: For openers, the general consensus is that America’s economy is slowing and that typically means corporate earnings and the markets will do the same. Expecting a big hip-hip-hoorah of a sustained bull market going forward then isn’t a likely thing given that info and the debt and political problems here and abroad. Even so, it’s still time to get your wish list of equity buys in order.

To that end, I dragged out the first blog I wrote about prices on the stocks in the DJIA. It was published March 5, 2009. The title” Got 20 bucks?”

On that day, the DJIA closed at 6594.44. That’s right, well under 7000. And, there were five stocks in that average with mid-day share prices under $5 a share: Alcoa (AA), $6.11 per share; Bank of America (BAC), $3.57; Citigroup (C), $1.17; General Electric (GE), $6.29; and General Motors (GM), $2.13, per share.

Twenty bucks would have bought you a share of each, sans commission costs.

On that same afternoon there were also 12 other stocks in that average selling for under $20 a share.

To show how things change, today, August 9, 2010, all 30 of the DJIA stocks closed down—as they did yesterday—at 10,719.94. That’s 4100 points higher than that close in March two years ago.

As for those five stocks trading under five bucks a share back then? Well, here’s the score: Alcoa’s (AA) last trade today was at $11.60; Bank of America (BAC) $6.77; Citigroup (C) is no longer one of the Dow 30 but closed at $28.49 and now is called Citigroup, Inc., New Common Stock; General Electric (GE) at $15.09; and General Motors (GM) at $23.92, but it too is no longer included in the DJIA and while the symbol is the same the company name is General Motors Company Common S.

To purchase just one share of each of those stocks at today’s close would run $85.87 without commissions. From 5 bucks to 85 and change is a heck of a gain in a couple of years.

I’m not worried about America and the market because history has shown time and time again that when prices fall down opportunities go up.

Not suggesting you ought to buy right now….just saying you ought to consider some equity possibilities.


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