Global Opportunities Beyond the Radar

ASX Bargains: Could These Dogs Howl in 2022?

Bull Market

Bull Market

 

Quantum Wealth Summary

 

 


 

Fear. Anxiety. Distress.

This is how the world reacted when the pandemic first struck.

Covid felt like an existential danger. A civilisation-ending threat. Just like a plot ripped out of an apocalyptic Stephen King novel.

No one liked staring into an abyss.

No one liked the uncertainty.

But…as it turns out…the existential terror didn’t last very long.

My colleague Simon has observed that once governments took action with aggressive money printing and fiscal stimulus, fear quickly morphed into greed.

Let’s put this into perspective:

So, clearly, we’ve transitioned from one end of the spectrum to the other. Gravitating from despair to euphoria.

And now…?

Well, now we are certainly feeling the aftermath of the grand feast that we so eagerly partook in.

Just take a look at the Buffett Indicator:

 

Source: Current Market Valuation

 

In terms of valuation, the stock market is now sitting at a record high. It is outstripping economic growth. It is outstripping company earnings. Some say it is even outstripping common sense.

This has led the pundits to make predictions of looming disaster:

Of course, the End of Days did not happen. We saw stocks continue to climb. And 2021 drew to a close without disaster striking, even despite the emergence of Omicron. Ultimately, greed proved to be a more compelling emotion than fear.

But now, as we say hello and welcome to 2022, what does the road ahead look like?

No doubt, we are experiencing a frothy market. An elevated market. And we are contending with inflationary pressures and rising interest rates.

None of us have a crystal ball. And as the experts have proven, not even they can predict with absolute certainty what will happen next.

Still, one thing is for sure: the easy pickings that we saw in the wake of the March/April 2020 drawdown no longer exist.

If you’re a discerning investor, you’re going to find it harder and harder to capture value. It’s no longer as obvious, nor as readily available.

Fortunately, though, there are still pockets of opportunity lurking out there. It is still possible to track down companies that are relatively cheap, despite the froth.

But here’s where a bit of skill and judgement is needed.

You will need to think differently. Because while everyone else is still focused on the Teslas and the Facebooks of the world, maybe it’s time to go below the surface. Study the undercurrents. Plumb the depths.

So, with that in mind, here are 2 contrarian stocks on the ASX that could still offer value in this expensive market…

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