The Buckingham Report

Did the market hit bottom on Tuesday? After a dismal first 88 days of the first quarter, equities staged a major rally yesterday as oil prices sank and a report from the Commerce Department saying that pretax profits of private and public companies were 13.5% greater in the fourth quarter than in the third quarter helped send share prices sharply higher. Happily, market breadth (advancing stocks compared to declining stocks) was favorable and volume was fairly strong.

Obviously, one day does not a trend make and many remain unconvinced that we have seen the lows. Sadly, I must confess that my Magic 8 Ball has not confirmed that we won't suffer any more setbacks, though I think that the start of first quarter corporate earnings reporting season next month will be a positive catalyst.

Of course, no matter what happens in the short run, we do know that equities have been the place to be over the long-term. Backing up that assertion are historical data from Ibbotson Associates presented in the table below. Take a look at the actual and real (after inflation) returns for the various asset classes to see why I remain optimistic as the odds are decidedly in the favor of the equity investor.



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Though it may seem counter-intuitive, I feel much better about buying stocks when the market has taken a tumble. After all, our objective is always to buy low with the intention of selling high at a later date. In fact, I did some significant buying of my own this morning when I picked up 25 names for my new Buckingham TechValue Portfolio. We have just launched our new Prudent Speculator Tech Value Report newsletter and just like in our flagship newsletter The Prudent Speculator, I am putting my money where my mouth is by investing right along side our subscribers. We invite you to click here to learn more about becoming a charter subscriber. This newsletter is all-electronic, so a subscription would give immediate access to the list of stocks I purchased today!

I am also happy to also report that our recommended list of stocks in The Prudent Speculator has climbed above 125 in number. The last time we had so many bargains to buy was August 2004! If you have been sitting on the sidelines or if you share my belief that now is an excellent time to be committing more money to equities, we encourage you to check out a special subscription package to The Prudent Speculator for friends of Al Frank Asset Management. Click here for more details:

Yes, I know that there are still many things to worry about, such as the omnipresent threat of terrorism, the budget deficit, the weak dollar, rising interest rates and sky-high oil prices, but I think that long-term-oriented investors should be taking advantage of the opportunities afforded by the recent sell-off. With interest rates remaining low by historical standards, inflation staying contained, corporate profits coming in better than forecast, alternative investments providing lackluster returns, merger and acquisition activity heating up and investor sentiment hitting high levels of bearishness, I think it is time to strike!

Warmest Regards,

John Buckingham
March 31, 2005

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The information contained herein is believed to be reliable. However, such information has not been verified by us and we do not make any representations as to its accuracy or completeness. Neither the information, nor any opinion expressed, shall be construed to be or constitute an offer to sell or a solicitation of an offer to buy any securities. Opinions expressed are those of John Buckingham, which are subject to change and are not intended to be a forecast of future events, a guarantee of future results, nor investment advice. Past performance is no guarantee of future results.

Previous Recommendations: Previous, successful recommendations may not be indicative of the results for all past recommendations. Certain previous recommendations have not resulted in profit, and in fact have resulted in losses. Of the 1,224 stocks recommended in The Prudent Speculator since 3/10/77 through 2/28/05, 71.24% were sold or otherwise closed at a profit or are presently in a profit position if not closed out. The average holding period for each of our recommendations has been 6.53 years and they have shown an average annualized rate of return of +21.00%, not including dividend reinvestment, advisory and trading costs or leverage. A complete list of all past recommendations is posted on our website at www.prudentspeculator.com. Each investment decision you make should be determined with reference to the specific information available for such investment, and not based upon the success of past recommendations.