Trapped in bear trend

The US financial sector is in serious turmoil, because of the excess built up over the years and the creative bankers. When sub prime issue first came into picture, nobody expects this bad, or at least not the man on street. Now, it seems like the sub prime is only the trigger of the bear. We are not economist or expert(even the expert not always right), nobody could predict when it would end, earning downgrade is the in thing now.

The stock is now on fire sales, which is rare over past few years. The valuation is so depressed now, in my view, the risk of holding equity for a period of 3 to 5 years is significantly reduced. In fact, you have a high chance to make big profit (of course, not immediately). Financial market is a reflection of human instinct which tends to overshoot on both side - top and bottom. People still expect the equity price to fall, therefore there is no interest in stock. Hence, the forever falling price. Maybe 3 years later, when you look back, you would regret that you missed such a great opportunity to accumulate stock.

However, not all the stocks are equal, at this tough time, it is a real test to separate the boys and men. Look at the company competitive position, market leadership and future plan, to give a clear idea of whether this is a gem being indiscriminately sold down. Buy on cheap and wait.

The equity price won't stay at this depressed level forever, someday when the confidence return, the rebound could be significant. Although economy goes through up and down cycle, in the long run, economy is set to grow. Because the human population keep growing. Good company would earn more profit and stock price would follow.

Bargain is everywhere now. Of course, everybody is waiting to buy it even cheaper when it fall further. I am a long term China consumer bull, the consumer stock looks very attractive now. Even the blue chips are also selling at reasonable price!