Distress brings opportunities

Right now, we are in the midst of a financial mess, U.S. banks are bleeding red ink from the subprime mortgage loans they bought or loans they made to unworthy credit customers, the U.S. dollar is falling, the consumer is slowing, bankruptcies are rising, credit card delinquincies are up, commercial borrowers are having a harder time raising money,China's stock market is in a major bubble, and U.S. real estate prices have fallen sharply. Even the European banks are reeling from what is happening in the U.S.

So are we in a financial crisis? No, well not yet anyways. Unemployment is still falling, businesses are investing in new technologies which makes them more productive and profitable down the road, technology stocks earnings are rising, the weak U.S. dollar has helped those U.S. internationally based companies become more profitable and the U.S. deficit is falling.Now to mention,the Dow Jones has bounced back from its August.

Don't get me wrong, investors still need to be wary of the risks the markets worldwide are facing. However, times of distress also present excellent opportunities to buy. You just have to have the patience and stomach for it.I have always said its harder to buy when the markets are hurting than when they are rising and heading towards being overvalued. A number of big banks such Goldman Sachs,and J.P. Morgan & Chase have already raised funds that buy into securities that are in distress. So if they can do it, so can you and I (on a much smaller scale of course).

Believe it or not, its actually safer to buy certain types of stocks when they have been hammered and the market has a lot of risks. Why? Because much of the negative news is already priced into the stock. So if and when the overall market gets hit with a correction, then your stocks will more than likely go down less. Plus its pays better in the long run when you go against the herd mentality.

The financials are starting to look appealing,although there could be further hits on bank shares, especially with Citi Bank having to deal with further mortgage writedowns. I would not go and put all my money into the sector, but I still like JP Morgan & Chase. Merill Lynch has been beaten up hard, but I still would shy away from the brokers.

Lets look at some of the stocks I have previously recommended

1)Microsoft's share (MSFT-Nasdaq) have really taken a spike upwards, when I last recommended Microsoft, the shares were at $31, now there just over $37. They had good earnings and revenue growth. If you own it, don't sell the shares, if you don't, I would still be a buyer. Return since I put it as a buy since Dec/06....19%. Not including dividends.

2)Good old Berkshire Hathaway (BRK/B-NYSE), this stoggy old company still chuggs along, making tons of cash from its various business and investments. When I put it as a buy, it was $3675, now its $4437, return is 20%.Berkshire does not pay dividends. They do however have close to $40 billion in cash with no debt. They are are not going broke anytime soon.

3)Oracle software (ORCL-NASDAQ), has been showing great revenue and earnings growth. All their software lines have been growing nicely, it has a great management team and is buying out the right companies. I put it in as a buy at $19. now is its just over $22. Return has been 15%.Oracle does not pay dividends.

4)Pfizer (PFE-NYSE), one of the worlds largest drug makes, has not done anything too exciting this year, but they have not done anything stupid either. They are still sitting on a ton of cash ($15 billion), and I look for them to make some acquitsitions this year.When I placed them as a buy, the stock was at $25.57,now its $23.67. If you count the 5% dividend it pays, you have basically come out even.

5)General Electric(GE-NYSE). The is best run conglomerate in the world in my opinion.It is into everything, tv studios, environmental technologies, turbine engies, trains, defense contracting, financing, to light bulbs. They always make good money, very efficient and must stock to own.I put it as a buy at $36, and it had at the time, a yield of 3.1%...Total return has been 11%, including dividends,14%.

6)Altria (MO-NYSE), the owner of Phillp Morriss cigarettes. What can I say about this stalwart, has lots of cash and very shareholder friendly with an expanding international presence. They spun off Kraft shares to its shareholders and everyone has done well. Altria had a price of $85 when I had it has a buy, now its $73, but u have to factor in the Kraft shares which were spun off to you and Kraft (KFT-NYSE) is now at $33 a share. Keep your shares in both companies.

7) Verizon (VZ-NYSE) one of the largest telephone companies in the U.S.Has a growing customer base, expanding its wireless operation, generates lots of cash, and is coming out with new products. Its a great company. I had it as a buy at $36.62, and at at the time, the yield was 4.2%. Now its at $43.87 so a return of 19% not including dividends, with dividends its closer to 23%.

Time Warner (TWX-TWX), another big diversified media conglomerate.Time generates a ton of cash, has prized assests, like Time Magazine and CNN, its also into making movies and books. They are spending up to $5 billion to buy back its stock. I put it as a buy at a price of $20.66, now its at $17.87.Total return is a negative 9.7%. Don't worry, keep these shares. They have a new CEO coming in, and there is nothing worng with this company.

Overall, you would have done quite well following my stock recommendations. Not to mention you would have ridden out the credit crunch up and downs of the market, without losing sleep. These firms are boring and very profitable, just the kind of stocks that you want to retire on. That is not to say that something down the road might not change for the worse, but if/when that time comes, you do some analysis on why its down, and if necessary, sell it or buy even more. But until then, you hold it, collect the dividends and continue to watch the stocks go up.