Getting back to the basics

A week ago I said the time is ripe for value hunting in the sharemarket but it can be frustrating for many enduring the whiplash like roller coaster ride in the market. What can we say when there are plenty of mess yet to be cleaned up.

For long-term investors bear market is the best time to pick stocks that provide value and good growth that otherwise would not be possible during bull time. Think like a businessman - buy low, sell high. If you think you found have found a bargain then why bother about volatility?

Well that's generally true but in today's complicated web of financial leverage and synthetic transactions, anything can happen. Just flip open the financial pages and you will see the carnage; Fannie Mae, Freddie Mac, IndyMac and back home the range of margin calls and gearings gone bad catalyzing a string of failure for the likes of Lift Capital and Opes Prime.

Many investors are sitting on their hands waiting at the sidelines while the global financial mess sorts itself out, and of course the looming global stagflation which is a bigger mess. I say this is the time that we should get back to the basics and do some strong research picking the most fundamentally sound stocks.

It is a matter of survival of the fittest and the time we are in now is just part of the economic evolutionary process of weeding out the weak ones. It is just like.... life.

Value Buy

I would have posted this earlier if not for physical injuries sustained on an early Saturday morning.

Basically the jizz is, after a meeting with the Macquarie boys on Friday, that its time to go dredge the market for fundamentally sound and value shares.

This view of mine formed 2 to 3 weeks ago has now be affirmed by the big boys and am currently having some stocks in my head that I am ready to plunge into.

Bear market is sales time.

Just OK

Just Group (ASX: JST) downgraded its earning forecast by a whopping 10% and following the downgrade its shares shaved 12.6%, to close at $2.78. P/E ratio estimate for 2007 is around 8.8045 and actual current ratio at 1.46.

Can Just Group be THE indicator of an increasingly slowing consumer spending? It's management thinks so. And backing their view is the Westpac-Melbourne Institute Consumer Index which recently released that consumer sentiment dipped 5.6% seasonally adjusted from May to June.

For all we know the inflation fueled razing of consumer sentiment is kicking in as evidenced by the RBA which recently decided to hold its rate. A sign that the series of rates hike are dampening the insatiable consumer demand backed by the current mining boom.

But is it all what it seems? To me, perhaps its just not the drop in consumer sentiment but its labels: Just Jeans and Jays Jays are no longer capturing the market with its repetitive and stale designs that might have been 'cool' a few years ago.

Having been into Jays Jays outlet recently didn't really attract me as its range of designs were pretty much the same as a year ago. Dull, plain and boring. In other words, they are still in iPod generation ONE mode.

Just Group doing Just OK.... to me.