Times are tough for us. The market is rife with speculation, frenzy, and ignorance. It is difficult as a value investor to justify our method at the moment. Especially when a stock like NVDA increases by 200% in one year, when 30% of the SP500 is divided among five companies, and when the “bro investor” benefits from this all-time high without having any strategies or knowledge other than ephemeral influencer videos.
You will undoubtedly notice a bit of bitterness in my tone, and I do not hide it. However, I fundamentally believe that common sense will prevail in the long term. That reason is the natural return of the pendulum, which now points to extravagance. The reality on Main Street is very different from that of Wall Street, and it is just a reminder that this bull market will fall from even higher.
We know that with such an expensive market, opportunities are fewer. Returns are lower. The risk is higher. It is therefore wise to look beyond the SP500. Medium to small-cap stocks are underinvested and present several good opportunities. However, rising interest rates are likely to kill some of them or at least slow down their growth plans.
The focus naturally turns to international markets. Europe scares me at the moment. Asia seems a better alternative, apart from the constant rumours of a Chinese invasion of Taiwan. Here is my two cents. Europe is trying to be as autonomous as possible in a conflict with Russia, thus relying less on U.S. intervention in a potential conflict.
However, if Taiwan is invaded, the United States has sworn to intervene directly. So if China invades Taiwan, we have much bigger problems to deal with than the state of the stock market in Asia. Therefore, I am mainly looking at the Philippines, Taiwan, and yes, even China for foreign stocks.
Another opportunity lies in the markets of the good old Commonwealth countries, particularly Canada, Australia, and of course, Great Britain. Their markets do not move as much as the American markets, but they offer several opportunities in undervalued sectors such as metals, mining, forestry, oil, and gas.
In short, after a long radio silence, I am pleased to write again in this little overview of market opportunities. Many things are happening with Value Stocks, including an announcement that will follow in the coming weeks/months regarding an upcoming service. For now, I have nothing more to announce.