How to evaluate investments in today's economic climate
It is hard to use past years numbers for today's stocks. So how would you assess investment opportunities in today's economic climate?
Depends how you view investing (long term vs short term, fundamental vs. technical) its incredibly difficult to predict cash flows in this environment with ever changing landscapes and global slow down. I generally still focus on standard multiples although I am admittedly mostly in cash right now in my PA, waiting for the right opps to get slowly get back in. The high volatility has created a great trading environment for experienced traders...I would also recommend looking into bonds and pref. positions as many offer greater returns on a risk adjusted basis (than standard equities)
At this point your view on investing (at least in the short term) is be contingent upon your macro perspective and how long you think the recession will last. As long as unemployment is ticking up, home prices are falling, 401-Ks deplete, banks wont lend, and check-books are kept closed we are in for a bumpy 09'
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