Is this the best time to buy shares in a decade?

More than 20 S&P/ASX 200 stocks are down more than 10% since late April. Now might be the best time to go shopping

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published June 17, 2015 2:58 pm AEST

Investment bank Goldman Sachs certainly thinks there're more bargains to be had on the ASX now than at any time since 2005.

Maybe they forgot about the GFC, when companies like Commonwealth Bank of Australia (ASX: CBA) fell as low as $24.03, Macquarie Group Ltd (ASX: MQG) at $14.75, Flight Centre Travel Group Ltd (ASX: FLT) at $3.39 and TPG Telecom Limited (ASX: TPM) shares swapped hands at an astonishing 9 cents.

Certainly, shares are cheaper than they were since late April, when the S&P/ASX 200 (Indexasx: XJO) (ASX: XJO) flirted with the 6,000 mark but has since dropped nearly 7%.

Since then, more than 20 ASX 200 stocks have fallen more than 10%, including Westpac Banking Corp (ASX: WBC) down 16.9%, Magellan Financial Group Ltd (ASX: MFG) down 16.8%, Caltex Australia Limited (ASX: CTX) down 14%, Coca-Cola Amatil Ltd (ASX: CCL) down 12% and CBA down 11%.

According to the boffins at Goldman's, our local sharemarket is now trading at a 9% discount to the global index when it usually trades at a 1% premium. The gap of 10% is close to the largest in a decade, just short of the record of 11%.

For international investors, our market is also more attractive thanks to the Australian dollar, which has dropped 20% in the past 12 months. Maybe that's just one reason why the world's greatest investor Warren Buffett has entered the market, taking a 3.7% stake in Insurance Australia Group Ltd (ASX: IAG).

Another attractive proposition is Australia's dividend yield – which has always offered a higher return than the rest of the world – but the recent sell-off has made our stocks that much more attractive.

As an example, Westpac now has a 5.6% fully franked trailing dividend yield, Commonwealth 5.0% fully franked, Magellan a fully franked 3.3%, Coca-Cola Amatil 4.5% partly franked and Flight Centre 3.5%, fully franked.

If you consider what has changed for any or all of these businesses since late April – the answer's probably 'not much' or 'nothing'. Now might be a perfect time to go bargain hunting. I know I've got my eye on a number of quality stocks that are being offered at sale prices.

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