Stocks are falling sharply worldwide, evidently reflecting worries over accounting scandals in corporate America. Investors appear to be panic-stricken and fleeing from the stock market.
Composure is needed especially under the current situation. As only a limited number of companies were involved in accounting misdeeds, it is reasonable to conclude that other firms have been sold below their fair values.
In view of price earnings ratios, yield spreads and other indicators, stocks have fallen to bargain-hunting levels worldwide.
Investors should also be aware of a clamor in the U.S. for corporate accounting standards to be toughened.
Historically speaking, the U.S. deals with misconduct, once it is recognized, at a high speed unthinkable in other countries. Accounting scandals are likely to be addressed faster than expected in the market.
Although U.S. President George Bush and Congress are split over how to correct the U.S. accounting system, their differences will be ironed out eventually.
While Japanese stocks have been falling along with U.S. stocks, they offer golden buying opportunities at their current prices, as a market maxim says that stocks hit bottom when everyone becomes a bear. Investors may well expect a return of 10 percent to 15 percent on investment at the current price level.