With stock indexes well off their highs and continuing to struggle, many investors, including some of the best value players in the game, are starting to see opportunities.
I first suggested this was the case on January 20: “Some Investors Start To See Value”.
Since I wrote that piece, a number of the best value fund shops in the game have reopened their funds to investors (see also “Is a ‘Great Opportunity’ Knocking?” (subscription required), The Wall Street Journal, February 26): Dodge & Cox, Longleaf, First Eagle, Tweedy Browne and Third Avenue.
What this means is that they see opportunities and feel they can put new funds to good use.
I have nothing but the highest respect for all of these shops and am taking notice.
What I think this means is that a mild recession is now priced into stocks and the only way we go lower from here is if we get a substantial earnings recession.
In fact, I do believe such an earnings recession will come about – but it will take time.
That’s why I think the Jan 22-23 lows could hold for quite a few months and that a near term re-test of those lows could represent an excellent medium term buying opportunity.