After all those posts about complaints, “pump and dump trading” and all the rest I thought it would be nice to get into some actual long term investment discussions .
Basically, at a time in which the S&P has a very high Price to Earnings (P/E) ratio, a quick Google search is indicating over 35 ([Source 1] (S&P 500 PE Ratio [Source 2] (P/E & Yields)) I decided to read one of Peter Lynch’s books. I migh try Benjamin Graham’s after .
In his book he discussed that even in times of market overvalatios / exuberance certain out of favour sectors or companies (the latter being sometimes “turn arounds”) can frequently be very good value investments. I seem to remember that he names mortuaries, waste treatment plants, material cleaning companies as examples of his time.
Obviously we currently have sectors like aviation are undergoing enormous strain, so I don’t think that these are suitable sectors. I am mainly looking for and would like to discuss sectors that have not been necessarily brought to their knees by the pandemic and that at the same time still have low fundamentals (for example, P/E ratios of under 10). Hopefully these low or reasonably valued sectors won’t go much lower even if the “growth stocks” bubble decides to burst and in the long term they could provide market-beating returns.
I will start first, to encourage discussion. The ones that come to my mind currently are gas companies and banks in terms of sectors and Russia as a specific country, P/E ratios for russian companies seem quite low. Banks have the uncertainty of the economic conditions (although the effect is currently just cosmetic in the accounts, not real, yet), Russia has political uncertainty and gas has the fact that cleaner sources of energy will be favoured in future decades, however unlike petrol its prices and demands are relatively strong. Crucially gas and banks have still been operating during the pandemic due to their importance.
Ideally I’d want this to be a thorough discussion on different sectors or even markets (eg. specific countries) and possible compnies within them .
I look forward to reading your thoughts/suggestions.