On the whole, markets today are generally efficient when measured over a period of years or decades. Occasionally, human emotional behavior gets out of whack, leading to some very intriguing price inefficiencies. Case in point: October 2008 and March 2009, whereby many stock prices were based on a wave of forced selling and not long-term intrinsic value. (For more, see Sympathy Sell-Off: An Investor's Guide.)
IN PICTURES: Eight Ways To Survive A Market Downturn
Almost Gone
For the most part, the easy money is squarely off the table. But there are areas of potential interest - namely those issues trading at or below net cash or significantly below book value. This creates one potential compelling catalyst - that a liquidation or distribution of the cash results in a tidy return to investors. Rule number one when playing in this space: pay very close attention to management. An asset rich company today could be a debt-ridden company tomorrow if management decides to spend that money on value destroying acquisitions.
