Barack Obama, the Sage of Washington, D.C.-HE IS NOW GIVING STOCK PURCHASE ADVICE!

Well, finally our President said something positive about the financial markets.

He said, " what you are now is profit and earning ratios starting to get to the point where buying stocks is a potentially good deal if you've got a long term perspective on it."

Certainly this is solid advice for investors under "normal" market conditions in a robust economy; advice that money managers and conservative money management firms would agree with.

Conservative investing strategy would buy quality stocks of companies that are well known when their P/E ratio got low...such as GE at about 3x, yesterday. What about stocks that are quality stocks but they have no "E" component in their ratio, such as GM?

Is it time to buy?

Well, our President seems to believe in the long term aspect of investing personally.

Based on his ANNUAL FINANCIAL DISCLOSURE FORMS for the last available year, 2007, all his major assets were basically listed as for (retirement), and consisted of mutual funds, and between $1 million and $5 million were in money market funds.

So, since he is taking the long term view, he has lost about half of is retirement funds, but the money markets funds seem not to have lost their value (he disclosed holdings in Vanguard FTSE Social Index; Vanguard Wellesley Income Fund; Goldman Sachs Large Cap Value A; . And under his own formula for investing, he has a lot of years to potentially catch up on the loses in his mutual funds.

So he is investing according to his formula...long term for retirement, and has plenty of cash available from the money market access funds.

That is great ! Our President has a solid investment strategy that anyone could be proud of.

Now, how does that compare with the rest of the country?

If you have your retirement funds in these funds, your funds are also down.

If you are now starting to retire like the baby boomers are now doing, they have significantly less in their retirement portfolios and therefore they have no extra cash to invest in buying any new shares.

If there is a lack of buyers, stocks do not tend to go up.

The second part of his long term strategy forgets to consider that in the long term, the trillions and trillions of government debt has to be paid off. How can it be paid off ?

It is impossible to pay on the principal of this mountain of future debt.

So in the long term, how will this debt be good for the stock market?

How can the long term be considered by those who just lost a job, or their house?

Long term to them means a month or two, or three.

In checking that strategy of long term investing...I discovered that by itself that may not be such a sound investment either. Just because markets tend to move up over a long period of time, one may never pick the best time to get in and out during those cycles.

For instance from the time of the market crash in 1929, it took till 1954 for the market to recover. It took 14 years for the market to even move a little from 1968 till 1982-less than 6% over that time...not much of a return.

Now what if you got in 12 months ago and bought all the stocks the President owned....your retirement portfolio is SOL, if you are retiring now. Do you want to wait another 14 years for it to go up 6%?

The SAGE has spoken....remember advice is worth the price you pay for it, so they say.

BUY NOW he said....! BUY NOW.....the P/E is low....

What about when there is no "E" in the stocks anymore?

We should all buy at ZERO or below....and it seems that pretty much that will be the case this year for most stocks a ratio of ZERO or below....

Maybe we should wait till later.

There are actually stocks, some 600 of them that actually have more cash in the bank on their balance sheets than their market value!

In effect you are buying cash at a discount to its face value...now that may be the best play yet.

We will keep an eye on the investing suggestions of our President, and see how it compares with the "Mattress Investing" (mentioned in a previous blog and significantly out-performing most investment advisers and stock market returns in the last year) strategy and how it compares over time to the market.