There's something of the "kid in the candy shop" feel about UK blue chips today.
For the first time since the depths of despair on the "glorious 12th" last year, I now find myself close to being fully invested again.
Just two days earlier, I asked the question: if you don't buy shares when they're cheap, when do you?
One of the best comments that followed read: "In answer to David's question, - ‘when they are cheaper still'. They are going down again this afternoon."
So it proved to be. Having opened at 5,165, the FTSE 100 closed at 4,991. It had reached its absolute low the previous day at 4,791. Since then, it's flirted tantalisingly with 6,000 peaking on 14 March, before those dastardly Greeks and other eurozone laggards have dragged it all the way back to 5,286 at the time of writing -- easily its lowest point this year. The peak came exactly a week after I explained why I'd been selling after the market rally.
This may look like I'm trying to time the market. I'm not. Instead, I'm doing my best to place my own version of accurate value on companies and acting accordingly -- while apportioning a sensible proportion of my overall capital to stocks. But I still see cheap shares as being essentially good news, if you have any cash left to invest.
Blue-chip bargains abound
Anyway, for better or for worse, I now find myself almost fully invested again. Unfortunately, the Fool's trading rules don't allow me to tell you where I've been putting my cash, but it isn't difficult to guess.
There are a lot of blue-chip bargains around at the moment; FTSE 100 companies supplying essential goods and services with solid balance sheets, a good international mix, paying very health dividends and on forward and back price-to-earnings (P/E) ratios that make you think your calculator is misfiring!
So perhaps "panic buying" is the wrong phrase to use here. But I have been mopping up a few of these bargains, having found myself with a lot of dry powder at what seems an incredibly short two and a bit months ago. In short, equities now seem to be pricing in a lot of woe.
The dilemma will now come, of course, if markets continue to crash. And this is the problem a lot of private investors will also face. But I'll do my best to take advantages of any further falls by gradually introducing more cash as and when possible.
Who knows anything?
It seems to me that the market is a better buy below 5,300 than it was at a shade shy of 6,000. This may seem naïve. There are genuine concerns out there at the moment, but I deliberately don't really "do" macro stuff. Instead, I believe in the idea of buying good value during pessimistic times and letting individual valuations do the talking rather than guesswork commentators.
Of course, I may be wrong this time, but it's important to realise that no-one really knows anything. There are always two sides to a story, and so to the market. But as my favourite investment great Ben Graham said: "…the chief losses to investors come from the purchase of low-quality securities at times of favourable business conditions." So today, again, we may be seeing the opportunity to do exactly the opposite. There is little that is favourable about current business conditions.
But it's hard to take the emotion out of things and work out your own fair valuations. Personally, I find having a watchlist very helpful. When shares fall significantly below my own perception of a reasonable value, I buy. You rarely time it to perfection, and that's not the idea anyway. This is essentially a bottom-up approach.
But if you want to mix in some top-down thinking, and would like to read some really well-informed debate on the macro picture and the eurozone situation, then go to the Fool's "Bert's Investor Sanctuary". You may feel like the class dunce, but it's well worth a read.
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