Market Blues

Well it is a new year but the market is carrying on just like 2007 never ended. Financials are getting hammered, defensive companies are holding up and the market has no direction.

What does the patient investor do in this scenario? Stay cool and look for bargains of course.

If you are in the lucky position of have cash available for investment then there are some great opportunities at the moment.

EBay has been falling again and is back at $30 now - where it was 12 months ago! That puts it on a 2008 PE of 18 - very low for a company growing at 20% and that should do OK in a recession.

UK banks are amazingly cheap. RBS is a good pick at 418p. It is globally diversified, has minimal sub prime exposure and is on a 2008 PE of 6!

For a UK technology play ARM Holdings at 110p has become a buy if you believe that fears of a global slowdown in consumer spending are overdone. It is growing at 20%, has a yield of 2% and a share buy back program. All for a 2008 PE of less than 20.

I am not going to sell any of my defensive holdings to buy into companies that are currently hammered and volatile. I did that last year, selling Google to buy into British Airway and BA seems to go down on a daily basis. But I will accumulate cheap companies on a monthly basis. I already have full allocations of eBay and RBS so that means buying into Barclays, ARM and maybe Land Securities while they are cheap.

One day the market will go up again - honest!