March 3 (Bloomberg) -- President Barack Obama said falling share prices may mean bargains for investors with a “long-term perspective.”

Obama, who is seeking to boost public confidence in his strategy to pull the U.S. out of recession, spoke a day after stock markets tumbled. The Dow Jones Industrial Average yesterday dropped below 7,000 for the first time since 1997. The Standard & Poor’s 500 Index closed at the lowest level since October 1996.

“What you’re now seeing is profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you’ve got a long-term perspective on it,” Obama said at the White House today while meeting with British Prime Minister Gordon Brown on battling the global recession.

The sell-off in the S&P 500 yesterday left companies in the index valued at their cheapest relative to earnings since 1986. The measure traded at 12.2 times company profits from the past 10 years, according to data compiled by Yale University professor Robert Shiller, who uses a decade of earnings to smooth out short-term fluctuations.

The S&P 500, the benchmark measure of U.S. stocks, has dropped 23 percent this year following a 38 percent decline in 2008 that was the steepest annual retreat since 1937. The S&P 500 fell 4.49 points to 696.33 in New York today. The Dow fell 37.27 points to 6726.02.

Helping Confidence

“Whether you agree with how he’s going about it or not, he’s trying to help confidence,” Bill Stone, who helps oversee about $110 billion as chief investment strategist at PNC Wealth Management in Philadelphia, said of Obama’s comments. “Certainly a piece of the confidence is to get the market stabilized.”

Obama compared the daily market fluctuations to a tracking poll in politics and said he wouldn’t be adjusting his policies just to meet daily market expectations.

“If you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong,” he said.

The president also said that consumer confidence is “taking root” with enactment of the $787 billion package of spending and tax cuts he won from Congress last month.

“There are a lot of losses that are working their way through the system,” Obama said. “And it’s not surprising that the market is hurting as a consequence.”

‘Unusual’ Comments

Presidents often steer clear of detailed comments about the markets, making Obama’s statements today “unusual,” said Steffen Schmidt, a political science professor at Iowa State University in Ames, Iowa. Obama’s decision to speak at length on the topic may have resulted from criticism that he’s spent too much time talking down the economy, Schmidt and other analysts said.

“The president appears to be realizing that his persistently gloomy outlook on the economy may be spooking consumers and investors,” said David Primo, a political science professor at the University of Rochester in New York. “This may be a calculated attempt to balance earlier remarks.”

Diane Garnick, who helps oversee $354 billion as an investment strategist at Invesco Ltd. in New York, said Obama’s remarks aren’t going to influence big investors.

“I’ve never heard of any professional investor saying that part of his investment strategy is to listen to the president’s opinion,” Garnick said. “They may listen to an economist or the Federal Reserve, but not a politician.”

White House press secretary Robert Gibbs said Obama wasn’t necessarily recommending the public invest in the stock market.

“The president has, on many occasions, talked about brighter days for our economy are ahead,” Gibbs said. “It’s not his job to comment on or react to what the market does, up and down, on any given day but instead to look at the longer term and longer horizon.”

Along with the stimulus plan, Obama also has announced plans to revamp regulations for U.S. financial markets and moved to shore up banks as part of his economic recovery strategy. Obama’s budget seeks standby authority for as much as $750 billion in new aid to the financial industry.

Obama and Brown said stabilizing the banking system is crucial to reviving economies around the world.

“We’ve got to isolate bad assets,” Brown told reporters. “A bad bank anywhere can affect a good bank anywhere.”

Brown, who will be the host for a summit of the Group of 20 developed and developing countries in London on April 2, aims during today’s pre-summit talks with Obama to forge a partnership to fight the financial slump.

To contact the reporters on this story: Roger Runningen in Washington at rrunningen@bloomberg.net; Robert Hutton in Washington at rhutton1@bloomberg.net

Last Updated: March 3, 2009 19:24 EST