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  • Writer's pictureMark Watson-Mitchell

The Market’s recent fallback offers significant opportunities for shrewd investors

I am grateful to Forbes Magazine for informing that Baron Rothschild, an 18th-century British nobleman and member of the Rothschild banking family, is credited with saying that "the time to buy is when there's blood in the streets."

He should know. Rothschild made a fortune buying in the panic that followed the Battle of Waterloo against Napoleon. But that's not the whole story. The original quote is believed to be "Buy when there's blood in the streets, even if the blood is your own."

In the last three weeks the FTSE-100 Index has fallen 8.1% from 7501.06 to close at 6893.81 last Friday night.

Considering the massive media attention to the falls in equity prices and the value of sterling has this not all been overdone?

But stand back now and take a look at how well the majority of the UK public has survived the dreaded Covid-19 and Omicron pandemics, think about the inhabitants of Ukraine suffering the pains of war, and then take a view on how Russia effectively helped to drive up fuel cost – are we really that badly off?

We have suffered worse before

So what if we have got rising inflation, we have had far worse before and lived through it all – don’t let the media stoke up general agitation.

We have a new Prime Minister and Chancellor of the Exchequer who are determined to change courses and bring about a big return to growth. It does not happen overnight, so give it time. Is that so bad?

Mega-gamblers took advantage to drive down the pound

OK the pound has suffered considerably, falling in reaction to Government moves – or was it due to massive gambling by mega-players?

They have done it before and apparently, they have scored incredibly well again by selling the pound against the dollar in the last few weeks.

Time for making adjustments

Life is full of having to make adjustments, we realise that we all have to take account of the differences that become evident due to the hand of forces known or unknown.

Just like a child falling over in the park and grazing a knee, parents do initial repairs and then tell the injured party to just get on with it and be more careful next time.

Charts have been on a general easing since the start of Ukraine

Last week I was looking at scores of company share price charts and the majority of them have marked off gradual regression from early year higher levels.

But then I balance off the mass of those falls with views that companies are now doing so much better than a couple of Covid years ago, that is despite supply chain hassles, staff shortages and rising prices creating pressures.

They are reporting improving sales together with the ability to cope with margin hiccups by raising their own prices.

Company after company reported that they have purchased as much necessary stock as they can get and can afford and that has helped in winning fresh orders and even bettering margins.

Order books are increasing and stretching out in time, which surely has to be good news.

There are masses of buying opportunities now available for patient investors

Looking at the smaller quoted company sector, from company capitalisations of £1m up to £500m which is my particular scoping, it is visible that share prices have dropped back caused more by lack of dealing activity and overall market lethargy than reacting to bad news.

That shouts a big signal to me – that if you have the cash, that if you have done your research, that if you have investing patience, well then there are hundreds of undervalued situations out there currently.

They are just like damsels at the fair or the barn dance just waiting to be entertained.

I remember doing the Covid-19 Market Recovery Portfolio in April 2020, making a number of stock selections from the market detritus as the pandemic broke out and the market crashed back, in the main they all bounced back quite considerably – with the ten-stocks portfolio overall appreciating by up to 120% within the ensuing year.

A number of those selected stocks are still over 140% up today.

Do your own homework and buy value

My message is to sit down and really start to do some fresh homework on your favourite stocks.

Scan other investment opportunities that may be fresh to your knowledge, but most of all assess the companies, their management, their products or services, their money-making ability, their balance sheets, their marketplace and their shareholder backing before investing.

I know that you will identify scores of ideal positions to take within the next few days, awaiting the market’s return to upward normality.

Stick to value and don’t pay over the odds, don’t be tempted to buy into popular stocks that are still overpriced, set your criteria and stick to those limits.

Truss is going for renewed growth and so should we!


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