Friday, January 31, 2020

What's A Value Investor To Do In This Market?

I'm sick of this market!  And my attitude is so garbage right now that some days I wish the market would get Coronavirus.  But it seems that the bull is immune to everything.  Back in late 2018, I thought for sure the end of the bull had arrived, only to see Trump convince the Fed to lower the Fed Funds rate (several times).  But the Fed went beyond the call of duty, doing Quantitative Easing (Q.E.).  The latter has been kept hush, hush, to the public at large, but if you want to know what truly turned the market around in early was Q.E.!!!

And now we are here in 2020.  When I say, "we," I'm referring to value investors.  Hey guys, remember when you could find lots of stocks with growth rates higher than their P/E's?  Yeah...neither do I.  In the strict sense of the word, value implies finding shares who have future growth rates higher than their current P/E multiples.  This was something that could be done with ease at times, but these days, your stock screener will turn up dead crickets when you search with those parameters.

Don't take me wrong, there are plenty of stocks with P/E's between 10 and 20 out there to choose from.  But having a low P/E doesn't make a stock a pure value play.  You might have to turn to mid-cap or dare I say, small-cap stocks to find value.  There are some value stocks in beaten down sectors like Financials, but then you're going Contrarian because rates don't seem to be budging up any time soon.  So long as Trump can scream at Fed Chief Powell with a bombardment of critical Tweets, the Fed will not hike.  This brings me to another point, is Trump a systematic or unsystematic risk?  I can't quite tell.  Or you can try the energy sector.  But gasoline is so 20th century.

4,000 plus days and counting.  Some people are just beginning to march along the bull as if they were in Spain.  Are they nuts?  No!  It's the usual FOMO (Fear Of Missing Out) effect.  It happens at the tail end of each bull market.  I sold the stocks I owned in my taxable Brokerage account yesterday, realizing a $300 loss for the year.  But it's only January!  I know.  I'm a value investor and I'm at a loss for ideas.  I still own stock in my 403b by way of an Index Funds: Vanguard's Total Stock Market, allocated at 65%.  So if the bull should keep strolling down the street, I'll still be making money.

It may not be the best time to jump into the stock market for the very first time.  In fact, it's one of the worst times.  But, it's the perfect time to invest in your financial education!  My latest book, Stock Market Investing for Minority Teens & Friends is out and live at Amazon!  It's a beginner's guide at heart, written for teens and young adults, but the information is perfect for all beginner's.  You can now read the front matter and the first 1.5 chapters using the Look Inside Feature.  Here's a picture of the book with a link to the page.  Thanks for reading!!


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