What are you waiting for -- better times ahead?
If you told someone you were staying out of the market until the eurozone crisis and Greek situation became a little clearer, they would think you wise to wait. But the late Ben Graham wouldn't.
In the man's own words: "…the chief losses to investors come from the purchase of low-quality securities at times of favourable business conditions."
The potential for Greece to exit the eurozone along with other market worries may have given us another opportunity to take the flipside of the great investor's advice. Or, as his star pupil Warren Buffett famously put it: "…be greedy only when others are fearful."
Incidentally, there is a really excellent debate going on regarding the Greek situation on the Fool's discussion boards.
Not many people would describe the current macroeconomic backdrop as "favourable". But the FTSE 100 is reflecting this. At the time of writing, it's at 5,517, hovering around its lowest point this year. In fact, it's lost 8% in the last two months. That's quite some drop.
If you're sitting outside the market waiting for things to unravel, and maybe get worse yet, then I think you should think again. Because if the market does fall a lot yet, there will be good reasons to be fearful, so maybe you'll be waiting again?
Falling prices = good news
So to reverse Ben Graham's advice, it's a good time to purchase high-quality securities during these times of unfavourable business conditions. But which ones?
Personally, I've been buying BP (LSE: BP) shares at their now lows. I think BP looks a good buy due to its combination of an unfeasibly low P/E, excellent yield and strong balance sheet. The shares are currently 412p.
Meanwhile, my Foolish colleague David O'Hara flagged up five outstanding FTSE 100 shares just last week.
And I've found myself kind of hoping for further falls in RSA Insurance (LSE: RSA) currently 104p, and Aviva (LSE: AV) now 301.5p. I speculated last week whether RSA's better than 9% yield can be maintained. I think it probably can. Meanwhile, Stephen Bland thinks Aviva still cuts it as a value share.
The important thing to remember when investing for the long term and for future income is that falling share prices are good news, not bad. But of course, to take advantage of such falls, it's essential to have kept at least some of your powder dry or to introduce fresh cash -- as well as to have the fortitude to hit the buy button when everyone is fearful.
But if you're always waiting for better market conditions and signals that the market has turned, the blue-chip bargains will have gone.
Investing is by no means easy in today's uncertain economy. That's why we've published "Top Sectors Of 2012" -- our guide to three favourable industries. This free report will be dispatched immediately to your inbox.
Further investment opportunities:
> David owns shares in BP, RSA Insurance and Aviva.