Some time ago I sat down with our research team and, to put it frankly, opened up a big can of worms.

"Investors are losing their shirts right now," I said. There were nods of approval all round the table. "The markets are in turmoil, and we haven’t even begun to see the worst of it. Once the recession takes hold, corporate profits will take a nose dive." 

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Again, there was assent. Then I pitched the killer question:

"What I’m asking you guys is this. Would it be fair to say that there’s nothing out there worth investing in right now?"

And that’s when things got really interesting...

Among other things, I was accused of being an "overly pessimistic doom-monger"! It was a fair one, I suppose. Though in my defence, I primarily cover the UK economic scene — and what is there to be optimistic about there?

Nevertheless, the guys had a point. While this is certainly a time to avoid most stocks, there are exceptions. In fact, our researchers have identified three investments they believe will buck the coming trend. I’ll tell you more about that in just a moment.

But let’s back up a little. Because I want to be clear on something. The FTSE 100 has now officially entered a bear market (defined as a 20% fall from its most recent peak). This is a time to hold fewer stocks, not more. I expect the current bearish sentiment to be around for some time — a year at the very least.

Why? Because it’s all playing out the way I feared. Take company earnings. Accountants Ernst and Young yesterday reported there were 98 profit warnings during the second quarter — the highest second quarter figure for seven years.

The recession is only beginning to flex its muscles. Expect more profit warnings in the months ahead as Mr and Mrs UK continue to tighten their belts.

As I say, a time to trim your stock holdings. But we don’t advise abandoning the markets completely. A useful by-product of bearish sentiment is that it uncovers value. Solid, profitable companies can be yours for considerably less than their ‘fair value’.

For many such firms, we don’t believe it’s quite the right time to buy... yet. But there are three companies we believe you should own right now.

Our sister publication The Fleet Street Letter — which I also edit — today publishes a special report on these three companies. Among other things, these three have distinguished themselves by announcing better-than-expected profits — this at a time when 98 other firms were missing forecasts.

And we expect this impressive performance to continue, for one simple reason. These firms have global, not local, operations. In particular, they’re exposed to emerging market economies that, unlike our own, are going through a rapid growth phase.

The scale of change taking place in these economies shouldn’t be underestimated. Billions of consumers are getting wealthier. Their purchasing power is rising, and they’re bringing it to market. This manifests itself in the soaring prices of commodities such as food and oil. 

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I want you, as a Fleet Street Daily reader, to be first in the queue to get this new report. In it you’ll read all about how the transfer of wealth from west to east affects you as an investor. You’ll see what caused western stock markets to have their ‘day in the sun’ — and why we don’t think they’ll have it again.

Above all, you’ll discover why three British companies have bucked the trend and delivered consensus-beating profits, despite the current gloom. And why we expect they’ll do it again.

Find out how why we believe that, despite the bear market, you could profit from one of the biggest investment opportunities in history.

Are you ready for the biggest oil price rise ever?

"Forget about the fundamentals," says commodities analyst Garry White. "Forget about speculators, demand from China, the shortage of rigs — forget everything you think you know about what’s driving the price of oil. If this happens, then all bets are off. We could see the biggest one-day price spike in history."

Garry’s talking about Iran. Israel has been sabre-rattling, and there’s still a threat America might attack.

"It’s no secret that Dick Cheney wants to lob a bomb at Iran," says Garry. "And he’s running out of time to do it."

Discover how your portfolio could reap the benefits as tensions are ratcheted higher...

Until next time

Ben Traynor

Today’s Daily Reckoning — You’ll find your bottom when you’ve forgotten to look for it

Think you’ve got trouble? Today is a public holiday in France. It marks the occasion when the mob rose up and broke into the Bastille, liberating a couple of half-wits and social deviants. It was only a small chimney fire in historical terms. But soon, the whole country was on fire.

The French should have realized right away that the Revolution would be more trouble than it was worth. A few years later, France was broke...at war...and her leading citizens were siding with the enemy. Not only that, hundreds of thousands were dying from small pox.

But that is the trouble with history; there’s no way to back up. And you never end up where you expected to go.

You can read today’s Daily Reckoning in full HERE.

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P.S. If you enjoyed this article you can find out more about our free email, The Right Side by clicking here.

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