It started from subprime mortgage issue in US 1-2 years ago but unfortunately almost everybody ignores the signal of a major disaster in capital market which is happening today. After the subprime, the world was haunted with the escalating fuel prices which touched USD150 per barrel, the highest ever in history. As a result, higher inflation was the main issue globally. Not many had expected that the next headline will be the plunged in stock market which had caused several casualties including nation bankruptcy besides corporates failures.
If you follow the market reports regularly, you would have sleepless nights and haunting nightmares. A question usually asked is whether now is the right time to buy? No analyst dare to give you the answer as the indices keep tumbling down everyday as if that there is no bottom line. It is a free fall to the stock market and several regulators around the globe had to suspend their markets couple of times mainly to curb the index from further deteriorating.
Personally, I feel that the bottom is almost there and for those who really consider as investors you should grab the golden opportunity now before it's too late! What I consider as genuine investors are those who look for long term returns with strong fundamentals with respect to the target stocks or companies. Dividends yield should be the sole consideration in the decision making. This is what investment is all about. You invest in a company in order to enjoy the dividend returns attributable to its excellent business operations. If this is the objective you should definitely grab the opportunity whilst the price of share is very low with low PE ratio and high dividend yield. Capital gain is only a bonus and not the prime objective for investment in stock market.
For companies, this financial crisis will hit your paper loss or unrealised loss for fair values of marketable securities. In other words, it will hit your balance sheet due to the mark to market treatment for investment in securities. Should you have strong holding power this paper loss may be viewed as temporary volatility in investment risk. Don't sell your stocks due to market sentiment or fear instead you should collect bargain hunting stocks to average your price. "Collect and hold" as recommended and practiced by Warren Buffett.
