The Bare Market

“The trend is your friend” has probably come to be one of the most accurate and prolific stock market adages of our time. It holds especially true during these incredibly volatile and sometimes dangerous market sessions.

In fact, well before the infamous tragedies at our nation’s economic capital and our nation’s political capital, there were telltale signs of an impending slide. Over the past eighteen months, the NASDAQ has gone from a high of 5,200 to a recent low of 1,500. The Dow Jones Industrial Average has experienced a similar decline though not as drastic, from a high of 11,800 to a recent low of 8,600.  When the market reopened on September 17, 2001, after its longest hiatus since the depression, it came as no surprise to cautious money managers that most market averages finished the day down about seven percent.

Commonly, traders and investors alike, attempt to guess the “bottom” of the decline. This practice is not only dangerous to one’s financial health but nearly impossible to accomplish. The market will gladly tell us when it is tired of dropping and wishes for a healthy rebound. Prudent investors will sit tight and wait for the overall market to rebound before jumping into most stocks.

While we wait for the market to rebound, there are a few solid companies waiting to give you a steady return on your investment. The most notable and usually overlooked of these companies is Philip Morris(symbol: MO). This behemoth recently spun off Kraft Foods, and still retains majority control in the foods giant Philip Morris also owns Miller Brewing Co. and its most prominent subsidiary is the Philip Morris Tobacco Co. it owns and operates. MO has a 10% profit margin on its overall sales. This means that for every box of cigarettes they sell they are making about $.30, and for every six-Pack of Miller product sold they are making roughly $.40. MO is trading at about $46 a share, which is about eighteen-percent away from its 52 weeks high of $54 a share. This type of business is one that is ideal for a recession-like economy because people will not cut their spending of food, alcohol, and tobacco due to market conditions. Also, MO pays a handsome dividend of about 6%, which makes this stock even more attractive.

Another business Plan that catches my eye in this marketplace is Affiliated Computer Services(symbol: ACS). ACS provides a full range of information technology services including business process outsourcing, technology outsourcing, and professional services to the commercial sector and federal government. ACS is primarily connected with IT consulting and infrastructure, thus they are not as harmed by an economic downturn as are “pure” technology companies such as Sun Microsystems, Oracle or Cisco Systems. In the last fiscal year, revenues at ACS rose an outstanding twenty-three percent. Much of the revenue at ACS is derived from its government contracts, and it appears as though it will be awarded the contract on rebuilding the terrorist damage of the information technology infrastructure at the Pentagon. Though its price is a bit steep at $84 a share it’s worth every cent.

With the economic and Political markets in a vast sea of uncertainty, the best investment advice comes from market legend and billionaire, Warren Buffett. Mr. Buffett was recently quoted as to what types of stocks he likes in this market and he said, “QUALITY. I would rather own a piece of the Hope Diamond than 100% of a rhinestone.