The recent stock market turmoil felt like “financial Armageddon,” said Roben Farzad and Tara Kalwarski in BusinessWeek. And there will surely be plenty of ups and downs before it’s all over. But panic is never a good strategy. “The time to panic, if there ever was one, was a year ago, when stocks were hitting their highs—not now, when they are hitting their lows.” Relative to Treasury bonds, stocks haven’t been this cheap since 1978. That’s why legendary value investors Martin Whitman of Third Avenue Funds and Rob Arnott of Research Affiliates are having a field day. Whitman is finding great deals on international stocks; Arnott is wading through the rubble in the financial services sector, which has suffered from what Arnott calls an “anti bubble”—when an entire sector plummets on pure panic.
You may have to look hard for the bright spots, though, said Paul La Monica in CNNmoney.com. At one point earlier this month, every domestic stock mutual funds except one—Forester Value—was in negative territory. But that fund’s manager, Tom Forester, isn’t exactly hunkering down. When the global markets were in panic mode, Forester was shopping for bargains in tech, media, health care, and even financial services. Like most value investors, he’s looking for strong companies that have been dragged down by overreactions in the market. “That’s what makes my investment strategy possible. I buy things when they are beat up due to emotional extremes,” says Forester. “I’m glad we’re human.”
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.