In what was described as the "perfect storm", the Australian stock market shed almost 6% of its value in September, its worst month since May 2012. However, with the S&P/ASX 200 (INDEXASX: XJO) now sitting 6.8% below its peak and having wiped all of 2014's gains, many analysts are now suggesting the local market may have been oversold.
At the same time as our local market has dropped, the Australian dollar has also retreated around 7.5% compared to the US greenback. When combined, the market's downturn has been more significant for foreign investors than for local investors which means that many could soon take advantage to buy Australian stocks once again.
Recently, The Australian Financial Review quoted Randal Jenneke from T Rowe Price as saying: "When the Australian dollar drops, then Aussie stocks start to look more attractive. Some people may feel queasy when both drop together, but I feel excited." He added that: "The September selloff in Australian assets is something we had been waiting for."
As a long-term value investor, I can't help but share Jenneke's excitement with more and more high-quality ASX stocks now trading at heavily discounted prices. While I accept that the market could certainly continue to fall in the near-term, I am willing to bet that investors who buy shares today will be well rewarded in the long term.
The BEST stock to buy today
Just like the old Chinese adage suggests, the best time to plant an oak tree was twenty years ago. The second best time is now. Three stocks which have fallen in price recently and have particularly appealed to me include Nearmap Ltd (ASX: NEA), Japara Healthcare Ltd (ASX: JHC) and Cover-More Group Ltd (ASX: CVO).
