Carlos Slim didn’t become the richest man in the world by being afraid to invest in a distressed market. Typical of Slim’s history, he is stalking some European telecom companies which are trading at distressed levels. Many of these companies are large constituents of their respective stock indexes so the stocks tend to sell off along with the indexes. While some of the larger companies such as Telefonica (TEF) are burdened with heavy debt loads, these businesses generate prodigious cash flows. Consumers are not apt to give up their cell phones unless they absolutely have to so I believe there is a great opportunity to pick up high quality businesses on the cheap. Short term concerns such as a dividend cut provide additional mark to market volatility, but for the long term value investor such as Slim, now is the time to buy.
INVESTING IN THE FINANCIAL MARKETS INVOLVES RISKS. OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.