One gold plated buying opportunity

Strange things these markets.

Just when you think stocks are going nowhere but down, along comes a a big day on the ASX yesterday, followed by the Dow jumping a HUGE 188 points overnight.

Yes, Foolish investors, stocks are back in vogue again!

My only complaint is that I was looking forward to picking up some bargains for my portfolio while stocks were on sale.

Still, many stocks I’ve got my eye on, including Scott Phillips latest ASX stock tip — a company just yesterday he reiterated as a buy recommendation to Motley Fool Share Advisor subscribers — are still on sale, having missed the sudden updraft, and remain excellent value.

Stocks on the cheap

If you’ve been in the investing game as long as me, you’ll know we view falling markets as opportunities to buy stocks on the cheap. Most don’t, sadly, running for the exits at the first whiff of panic.

They hope to wait out the storm, but ultimately end up buying back in at much higher prices… or, even worse, they sit on the sidelines and wait, and wait, and wait, and wait.

Yes, Foolish readers, investing involves an element of risk. You can lose money.

But, tell me a rich person who didn’t take a risk?

Term deposits don’t make you rich

I don’t know of many such people who made their fortune investing in term deposits.

I do know Warren Buffett is worth $56 billion, made mostly by investing in the stock market.

Warren Buffett

Term deposits or ASX stocks. You choose…

A real bull market

It didn’t take much for the bulls to come out of the woodwork, with Marketfield Asset Management’s Michael Shaoul telling Bloomberg

“This is a real bull market. What happens in real bull markets is they do fine, and then they are occasionally interrupted by an exogenous shock.”

Bloomberg says Mr Shaoul has seen the US stock market lose 5% eighteen times since 2009, and every time, he’s been rewarded for hanging on.

Yes Foolish readers, buy-and-hold investing is still alive and kicking.

Also alive and kicking is the prospect of low interest rates for an extended period of time… which all points to the “real bull market” also being real for an extended period of time.

A gold plated buying opportunity

Once investors get that into their noggins, like us Fools, they too will look at market drops as gold plated buying opportunities.

James Paulsen from Wells Capital Management gets it, saying on Bloomberg

“I like buying on this fear of a crisis in the emerging world.”

Speaking of gold plated buying opportunities, as I mentioned above, Motley Fool Share Advisor ace stock picker Scott Phillips reckons his latest ASX stock pick is a long-term winner.

Unfortunately I can’t reveal the name of the company — that is strictly reserved for Motley Fool Share Advisor subscribers only — but just this week know the company reported what Scott said were “some very strong earnings.”

It wasn’t quite enough for Scott to take a victory lap — the tip is a mere seven days old, and as Scott yesterday…

“…seven days doesn’t come within a bull’s roar of our long term timeframe. Put us down as pleased, and confident of the company’s future. It remains a buy.

NO! You didn’t miss the buying opportunity

The last week or so was a perfect opportunity to pick up stocks on sale.

But you haven’t missed out — yet anyway.

Markets are still lower today than at the beginning of the year.

Taking advantage of falling markets are how fortune’s like Warren Buffett’s are built.

And with reporting season ramping up, some more nice gains could be ahead, according to AMP Capital head of asset allocation Nader Naeimi, as quoted in the AFR

“Expectations for this company earnings season are quite low so it should be pretty easy for some of the bigger companies to provide upside surprise.”

While that’s good news for investors, it seems people are finding other things to worry about.

The fear of losing your job

One third of all consumers are increasingly fearful (Opens PDF) of losing their jobs according to ME Bank, despite evidence the labour market is stabilising.

Apparently the rise in job insecurity is a result of rising unemployment along with a surge in casual and part-time roles.

If you are a telemarketer, watch repairer or a library technician, you have more to worry about than others, according to another report, this time in The Age.

The report suggests those jobs have a 99% chance of being computerised.

If it means no more annoying phone calls from telemarketers, that’s probably not a bad thing.

Save your money

With more than half of all Australians struggling to save money each month — including many with less than $5,000 saved for an emergency — it’s no wonder many fear for their jobs.

Losing your job and having no savings to fall back on is a deeply worrying thought.

While 49% of households usually spend less than they earn each month, 51% either break even (40%) or spend more than they earn (11%).

That’s right Foolish readers — 51% of Australians are going backwards because they aren’t saving a single cent!

And 40% of those households are likely to see no benefit if they increase their income, instead more likely to expand their spending to leave them in the same status quo.

If that’s not bad enough, 11% of Australians are even worse off, spending more than they earn — by drawing on savings, credit or equity in their home — which can only end in tears if it continues.

The bottom line is, for half of Australians, a life of leisure in retirement is nothing but a pipe dream.

Add in the stress over losing your job and many of us will likely be in poor health as well. Then you have the extra medical bills, and the worries start to build.

I’m planning now for a better, wealthier retirement

I want to enjoy my retirement, and I’ve started taking a few more steps to ensure I do.

That report has certainly made me sit up and pay attention to the smaller discretionary items in my household. Do I really need both those pay-TV receivers, one of which we hardly use, but pay $20 a month for?

The simple things are still the best.

Have a budget, track your spending, spend less than you earn, avoid unnecessary borrowing from credit cards or through other means, and start investing now.

One great book, two great ASX stocks, and one radar stock up over 50%

One of the best books that I have read on the subject was The Richest Man in Babylon, by George Clason.

It’s a fictional tale designed to deliver some simple financial lessons, and well worth the hour or two it takes to read — it’s a very short book.

Two of the best stocks on the ASX are Woolworths (ASX: WOW) and Coca-Cola Amatil (ASX: CCL) — good, solid companies that can grow earnings for years to come.

I’ve got my eye on both at the right price.

Another stock Scott Phillips highlighted to Motley Fool Share Advisor members in January as a Stock on Our Radar was Aurora Oil & Gas (ASX: AUT).

Today, the company has received a takeover offer 56% higher that its last closing price.

No wonder directors are fully supporting the offer, and urging shareholders to do the same.

Kathmandu aiming for the summit


Source: Flickr

Another stock I’ve got my eye on is adventure-wear retailer Kathmandu Holdings (ASX: KMD).

Currently sporting a P/E ratio of 14.4 and paying a fully franked dividend yield of 3.8%, it doesn’t look expensive.

David Kirk, a former All Blacks captain and new chairman of Kathmandu, says the company is looking at overseas expansion, targeting its ‘natural’ customers — wherever they are.

Kathmandu makes a load of clothing and accessories for the outdoors, such as jumpers and jackets, sleeping bags, hiking boots and backpacks.

It’s not just Aussies and Kiwis who like to go clambering up and down mountains in the middle of winter, after all.

Mr Kirk has told the AFR that he wants to build the company’s brand presence globally. He says he wants people to Google ‘Kathmandu’ rather than ‘outdoor clothing’.

That’s a fairly ambitious target, given Kathmandu faces a number of much larger global competitors including several in the US, such as privately owned Recreational Equipment Inc. or REI as it is known (its stores are around 4 times bigger on average than Kathmandu’s) and the US$4.6 billion Cabela’s Inc (NYSE: CAB).

Mr Kirk says that the next stage of growth involves more online and geographic diversification, adding complexity and risk to the next stage of the retailer’s growth.

He’s also describes himself as a ‘growth guy’, and has been known to make plenty of acquisitions in his previous roles.

I’ll be hoping Captain Kirk doesn’t follow in the path of another well-known international rugby player, Michael Hawker, a former Wallaby, who led Insurance Australia Group (ASX: IAG) into a disastrous acquisition-led expansion in the UK.

Given the risks, I’ll be watching this one from the sidelines for now to see how it plays out.

The top ASX pick you’ve never heard of… Top Motley Fool analysts just identified their #1 ASX pick for 2014, a small-cap stock that could be poised for big gains (and offers a fat, fully franked dividend!). Discover all the details now, including the name and code, in this FREE investment report, "The Motley Fool’s Top Stock for 2014."

Motley Fool writer/analyst Mike King owns shares in Coca-Cola Amatil and Woolworths. You can follow Mike on Twitter @TMFKinga

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