Instead of Complaining About Stocks, Move on This Rare Opportunity

You only get chances like this every decade or two. Smart investors recognize key turning points ahead of the crowd, and position themselves to make fortunes after the public at large finally wise up and jump on board. That typically happens well after the bottom has become clear in retrospect. What key turning point am I referring to right now? The value vs. growth valuation disparity. From around 1996 through March 2000, technology and especially internet-related equities were the place to be. Many of those names sold for outlandishly lavish multiples, if they had any earnings at all. Many of the most sought-after tech names had not yet shown any profits. In the years preceding that insane bubble bursting value stocks with excellent fundamentals were being ignored. The S&P 500 value-to-growth relative strength fell to what was then a record low of about a 40% discount. Just as had happened recently, media talking heads criticized anyone who came on the air touting great buys in the overlooked companies' shares. Why would you want to buy 'bad charts' like that? Don't you know tech is the only thing that's working? and similar derisive comments were heaped upon saner money managers, who cautioned that tech was way too expensive. History now shows conclusively that tech in general, the Invesco QQQ exchange-traded fund , and stalwarts like Microsoft and Cisco Systems were on the verge of being crushed over the next few years. At their October of 2002 lows, those three proxies for the tech sector were down from 45% to greater than 75%. Fast forward 15-years and both MSFT and CSCO were still far underwater from their end of 1999 prices, despite having posted fine growth in fundamentals. As of Dec. 31, 2014, the QQQ fund had averaged under 1% annualized and compounded for 15 years. Meanwhile, value-oriented shares were having one of the best 7-year rallies in history. From the market's October 2007 peak through recently tech names once again dominated. The value-to-growth valuation disparity widened to never-before-seen levels. Right around the start of 2022, the valuation discount reached an unprecedented 60%. The switch to value from growth back in the spring of 2000 took on a W-shaped pattern prior to the true breakout. A similar W-formation has now been carved out over the past 16-months or so. Whether it happens this week or in the near future, value is primed to soar higher as the meme stocks and other grossly overpriced high flyers are knocked back to earth. Here are just three examples of stay at home stocks that ran up during the pandemic, despite continued losses and have since crashed dramatically. You could easily add Meta Platforms , Amazon and Netflix to the list, even though they all remain highly profitable. Amazon still appears pricey. FB and NFLX might now be reasonably valued enough to be worth considering for purchase. If you agree that Value is now set up to surge, consider buying a portfolio of extremely good names like these at unbelievably cheap price-to-earnings. Due to negative market action late last week, most of these great picks were slightly less expensive than they were on April 27. Griffon reported fabulous Q1 results, which far exceeded analyst estimates, since. Note that I eliminated Macerich , a real estate investment trust, and substituted FedEX on the list below as MAC does not trade as much on earnings as on funds from operations. Ebix should get a nice bounce once its EBIX cash initial public offering is finalized. Interface and Caleres are due to report very soon. American Woodmark's fiscal Q4 report should be the first positive year-over-year comparison since January 2021. Every quarter afterward should show outstanding year-over-year profit growth, even better than the coming one. From today's ridiculously low multiples, I expect these 11 stocks to see major P/E expansions over time, leading to some game-changing price rebounds. I made millions of dollars from 2000 through 2007, simply via purchase of these kinds of stocks even as tech/internet shares tanked further. Forward-thinking traders can look forward to repeating that same success now. Avoid owning still overpriced shares. Load up on low P/E, unloved stocks which are long overdue for better treatment. Your account statements, IRAs and 401(k)s will thank you later.

Instead of Complaining About Stocks, Move on This Rare Opportunity

Value stocks are now cheaper than near the Internet and tech top of 1999-2000. Why wait another 20 years this kind of chance?

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