Market slump bring bargains for buyers

Recession woes may have people tightening their belts and investors wary of the stock markets, but economists at the International Bank Credit Analyst say mid-1991 will “see a bottom in world equity markets and the beginning of a rising trend in stock prices.” Bottom feeders, who usually make a habit of buying shares at depressed prices, have probably already begun to scan their stock tables in anticipation of future bargains.

“Investors have a you-go-first attitude, and they want to see a little momentum upward before jumping in,” according to a recent report in the Wall Street Journal.

There has certainly been no shortage of buying opportunities though, as many junior gold stocks in particular have plunged to record lows in recent weeks.

“The market is so oversold, and there is so much pessimism around that we would not be surprised to see an extremely sharp rally, but it takes more guts than we’ve got to flash a major buy signal,” says the California-based Dines Letter for traders and investors.

Longer-term investors who have been out of the market this year are making money because what they are going to buy has been dropping in price, thereby increasing the number of shares that can be acquired with the same capital.

“Indeed some bargains are opening up that make us drool,” says the Dines Letter. “But we don’t see much harm in waiting a bit longer.”

According to the Dines Letter, the majority of official recessions we’ve had since May, 1937, have lasted from 6-16 months, or an average of 10.9 months. Analysts say the current recession started several months ago.