by Scott Pape - October 28th 2011
NONE of this doom and gloom has done anything to diminish my desire to be an investor – just the opposite.
In fact, I was talking to a cranky old stockbroker last week who was crying into his beer about the herd mentality of the market: “Most people call me when the share market’s up. But if you want to get rich, you need to get interested when no-one else is.” (Hold the phone – we’re not there … yet.)
While the overall market may struggle along for years, tough times can be a once-in-a-lifetime opportunity to buy truly great businesses at bargain prices. That’s why right now I’m beginning to compile a share market crash shopping list.
Here are a few companies on my list:
Coca-Cola. Let’s be honest, Barnaby Joyce could run Coke and it would still make shedloads of dough. It has one of the most recognisable brands in the world, insane profit margins on what is really just sugar and water, an all-but-sewn-up market that spits out upstart rivals (hello, Virgin Cola), and a relatively untapped Chinese market.
Berkshire Hathaway (of which I am already a loyal and long-term shareholder). Run by legendary investor Warren Buffett, this is an investment company whose assorted businesses throw off around $1 billion a month in earnings, all of which Buffett takes and invests into undervalued companies. Last month, he announced he’d found another gem – Berkshire Hathaway. After 40 years he’s broken with tradition and announced he’ll buy back his own shares, suggesting it was “like getting dollar bills for 90 cents”.
Woolworths. Closer to home, I’ll be keeping a close eye on Woolies. Even though retailing is in a slump, it has a stranglehold over people’s pockets. Between Woolies and Coles, 25 cents in every dollar we spend at retail outlets ends up in one of their tills, according to researchers IBISWorld. That’s one of the highest concentrations in the world (just ask the ACCC).
In truth I’m always looking but rarely buying. However, I’ve learned that if you make a habit of kicking tyres you’ll recognize a dirt cheap Ferrari when you see one. And given that we seem to be quickly unwinding from a 25-year borrowing binge, opportunity could soon bust our door down.
Tread Your Own Path!
Photo: http://www.flickr.com/photos/leorex/65842983/
Are you looking for 100% INDEPENDENT investing advice and ideas from Scott and the Barefoot Team?
Click here to access our latest share report – free of charge.
Follow @scottpape on Twitter
PDF Barefoot also recommends:
12 comments
Love your view on this one Scott, i have been a avid buyer over the past 12 months. Value is there to be had with a long term outlook.
I’ve been building a war chest and compiling a list of stocks to buy during the impending crash. Both Coke and Woolies are on my list so I’m glad to see I’m on the right track!
Although I hold woolies, I have some concerns about buying more. I think they are headed for tough times with a resurgent Coles run by wesfarmers. Secondly, I think their proposed challenge to bunnings with their own hardware chain is going to turn out to be a total disaster.
I can’t stop looking at Telstra…
A price to earnings ratio of 11.90 and a fully franked dividend yield of 9.02% at $3.10 at the time of writing.
They also recently announced their intention to maintain that dividend for the next 2 years and to carry out a share buy back.
Is there something there that I’m missing because it almost seems too good to be true.
As for the Coca Cola tip… I’m going to assume that they’re the Aussie Coca Cola Amatil with a PE of 22.
That’s quite high, are you going to run an article with why that’s a good buy when there are plenty of companies with higher yields and lower P/Es?
I’ll respond to myself and say that it’s probably the america Coca Cola given the Berkshire Hathaway reference after it and the much more reasonable ~12 P/E.
I’m with you Scott that now is a great time to be a buyer, but must admit I prefer your general recommendation (not specific, he’s not giving advice people) about low cost, diversified, listed investment companies that give you exposure to far more companies than cherry picking a few. They provide a better return for the risk you’re exposed to. I’ll have this debate with you anytime over a beer.
Hi Scott, great list of companies but i was wondering how you buy international shares from here in Australia? I’m assuming of course that the coca cola that you’re referring to is the US parent of the local one here. Most of the online brokers available here are for the local share market and those that offer international share buying charge a pretty high fee, or need you to have upwards of 10/25k to start of, for international purchases. For a small investor just starting to buy shares that’s pretty high. Are there any online brokers you’d recommend for international shares. Do lemme know it would be a huge help! Thnx. Mark
I have my shopping list already. There’s a few on there but I’m still kicking some tyres for a little while.
In the meantime, it’s small business time.
Thanks for letting us know what your up to nath very reasuring.
Hi Scott, thanks for all your tips and innformation. I’m 56 and thinking about doing something in addition to salary sacrificing (only got 130K, SS $350/week) and paying mortgage (190K) quicker. Not a good position for my age. Can you say something about LICs? Thinking abou putting investing in them, or a few of the cheaper (of course!) Bershire Hathaway shares. Thanks Scott regards Kate
scott love your column and advice….but…i have to laugh when in one blog you moralise that people picking stocks are like monkeys throwing darts at a dart board, or better yet that Buffet( that furry mate of yours) can pick better companies than most experienced funds managers. Then you give us this thread about your best picks of when the crisis hits rock bottom.
I’m confused, are you saying that you are better than Buffet (dog) at picking companies, or that you can be trusted because you are the one that feeds Buffet and he gives you the picks in return, making your picks better than everyone elses. you see the hypocrisy right? still keep up the good work.