Long-Term Stocks: Three “Best of Breed” Companies On Sale Right Now

by Floyd G. Brown, Advisory Panelist, Investment U
Monday, February 25, 2008: Issue #767

At dinner the other night, I had a spirited discussion about market timing. Several listeners to our semi-debate couldn’t believe it when I said I enjoy the current market turmoil…

“How can you enjoy it when stocks are up and down in such a volatile way?” one gentleman asked.

I simply responded by saying, “As a contrarian, I love to buy other people’s mistakes, fear and pain.” This can lead to obscene profits if you only have the discipline to stay invested and buy more equities in times of uncertainty. Just ask Warren Buffett. As an investor, you want to buy when the market is oversold. And I believe right now is a great time to add long-term stocks to your portfolio.

This past month, I have been almost giddy with excitement as some of the best companies in the world are selling at deep discounts. Tuning out the noise around us reveals the opportunities the credit crunch has created – the ability to buy long-term stocks from quality companies at historically low prices.

Here’s why, plus three companies I think will prosper…

Buying Long-Term Stocks During The Fear Festivals

Looking at the chart below of the NYSE composite 12 months after Black Monday in 1987, did you have the courage to buy long-term stocks after that fear festival?

Did you have the courage to buy after the collapse of Asia’s currencies in 1997?

Did you have the courage to buy stocks after the collapse and bankruptcy of WorldCom in 2002?

I feel the same way about this crisis as I did about the three mentioned above, and as I did during the days after 9/11, or the days after the first gulf war in 1991.

Tune Out The Nonsense & Buy Long-Term Stocks

When the market gets crazy and fearful, you want to be able to tune out the nonsense and pick quality long-term stocks. You don’t want to be seduced by the little guy inside your mind who tells you that you can time the market. He is a liar.

After the most exhaustive study on market timing, an NYU researcher concluded: “Its appeal to investors, notwithstanding, market timing remains an elusive dream for most. Looking back at market history, there have been far fewer successful market timers than successful stock selectors, and it is not clear whether even the few successes that can be attributed to market timing are more attributable to luck.”

So go ahead, pick some stocks. Three I especially like are:

• AIG (NYSE: AIG)
• Goldman Sachs (NYSE: GS)
• And American Eagle Outfitters (NYSE: AEO)

All three are the best in their businesses and selling at unbelievably cheap prices right now.

Floyd

Floyd Brown, a regular contributor to Investment U , began his highly successful investing career while still in high school… and made his first million before turning 30.

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