THOUGHT FOR WEDNESDAY 30TH JANUARY 2008
From top share author MALCOLM STACEY
Hello Crazies,
There's really no reason to run away from the Stock Market because shares have fallen. In one sense, this is a good time to start.
You wouldn't buy a car or a telly when the prices are high. You wait for a sale and buy 'em cheap. I do, any road up. As far as shares go, we seem to have a knock-down sale now.
You can tell that because of the present high number of low price-to-earnings ratios. If the cost of a share related to the money the company earns is cheap a low PE ratio shows this.
And PE ratios are pretty small for banks at the moment. Now of course there's a reason for this. The market does not think much of the banks' chances of continuing to make the sort of high profts they've enjoyed in recent years. I happen to think that the banks are a bargain right now - because they will get out of any trouble with their usual skill.
But am I right? This is what you must decide. Not me - you. But remember that if the share price is what the market thinks now, it won't be the same price later on. It may fall. It may rise. Something will happen.
Remember the price now is what the market is prepared to pay now. That story will change. If you think a share price will rise, you should buy the share. If you don't think it will improve, you should sell now.
What I'm trying to say, though perhaps not very well, is that there is no bad time or good time to get into shares. The prices now are right - because the market says so. You cannot say they are wrong - that shares are too cheap or too dear. They're valued right now at what the market says they are.
Read what you can - ShareCrazy.com has nearly everything you need to know - and then do what you think fit. Don't dither just because the newspapers give you a load of scare stories. You're just as likely to predict the future correctly - if you have plenty of information - as they are. Rock on!
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