Buy cheap, REAL cheap

With the market down a cool 40% it seems like people who could not tell the difference between a stock and a stick are all of a sudden getting interested in the markets. The markets are getting harder to avoid as the wild swings in the market are the perfect news to capture the general public’s attention in the afternoon. The general consensus is there are bargains out there waiting to get picked up. I agree. What’s keeping institutional investors on the sidelines is whether the worst has passed or is there another shoe to drop. Now, reading some posts from the financial bloggers out there is interesting. Many bloggers are writing about how they cannot decide which stocks to buy as their are simply too many bargains. The one things I am noticing is some of their stocks are cheap but not REAL cheap.

This situation recently came to mind as I spent a weekend at La Jolla’s Sheraton Hotel which is owned by Starwood Hotel (HOT). I remembered a while back it was rumored Sam Zell might buyout Starwood Hotels (HOT). After spending some time researching the company I came to the conclusion that the stock is undervalued. Not bad eh? But then I thought to myself…. Why buy a dollar for .50? When there is another dollar down the street for .30?

These are historic times according to some well known investors. Great investors like Warren Buffett, Bruce Berkowitz, Marty Whitman are calling it an opportunity of a lifetime, so why be satisfied with cheap? And why not invest in REALLY cheap?

Just a thought.

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