YCG Investments
“If you buy above average businesses at below average prices, on average, we believe you should come out ahead.” — Brian Yacktman

Mosquito in a Nudist Colony

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Wow – what a rocky week in the markets! Over the course of a week, the S&P 500 dropped from $1,100 to $900!

An investor friend of mine was joking with me today and said, “I feel like a mosquito in a nudist colony!”

We would concur. We’re starting to see valuations us value-starved investors haven’t seen for a LONG time.

Having said that, we need to keep in mind that today the S&P 500 closed at about $900 – which we would say is approximately fair value. Markets do tend to overshoot to the downside. To be in line with the “Great Depression” levels we’ve seen in the past, the S&P 500 would drop below $500! Yep, another 50% decline in the markets from these price levels isn’t out of historical norms. So, some stocks are still definitely over-valued and thus it’s important to be diving into the right kind of companies. But the point is, we’re finally starting to find some great values out there. These certainly are some exciting times!

Disclaimer: The specific securities identified and discussed should not be considered a recommendation to purchase or sell any particular security. Rather, this commentary is presented solely for the purpose of illustrating YCG’s investment approach. These commentaries contain our views and opinions at the time such commentaries were written and are subject to change thereafter. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. These commentaries may include “forward looking statements” which may or may not be accurate in the long-term. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable. Past performance is no guarantee of future results.

Posted by: Brian Yacktman | October 10, 2008 | Permalink

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