Bubblesitter: I think there are going to be some excellent opportunities for the sharp investor out there. The problem you have is that any serious effort at due diligence is going to be hampered by what you don’t see, meaning those potentially toxic assets and liabilities that are “off book”.
The WSJ article referenced the fact that Ben Graham lost nearly 60% during the period 1930 – 1933. I’m a big fan of Graham’s, especially Graham’s Theorem for company valuation, and so is Warren Buffett. Buffett built Berkshire-Hathaway up through well placed bets on undervalued or misvalued companies.
I think those same opportunities will exist during this downturn as well. You’ll have to pay very close attention to not only the books, but the accompanying notes to the books, especially in those companies involved with any off book transactions. The other question I would ask is: Corporate bonds or corporate stocks? Is yours to be a buy and hold strategy, or are you looking for one of those type situations where a company is incorrectly valued and represents a steal on the stock side of the equation?
