As Alexander Green points out in today’s article, his forecasts are “about a lot more than a handful of tech giants with pie-in-the-sky valuations.” Alex focuses on truly innovative companies that are solving real-world problems.
That’s exactly why whenever longtime Oxford Club Member and journalist Bill O’Reilly feels uncertain about the financial future, he turns to Alex. Recently, the two sat down to talk about Alex’s next wealth-creating prediction… and his answer left Bill stunned.
Yes, we’re seeing the highest inflation rate in decades, mounting tax hikes and a growing national debt. But according to Alex, a series of events is coming that will lead to more wealth creation in the next two years than in the past two decades combined.
In Alex and Bill’s sit-down interview, they discuss four breakout “buy now” stocks that are destined to lead to massive growth in the years to come.
Learn more about Alex’s stunning revelation here.
I began 2022 with one major investment prediction: This would be the year for value stocks.
In the Annual Forecast Issue of The Oxford Communiqué, I suggested that value stocks – companies that are inexpensive relative to sales, earnings and book value – would dramatically outperform “the glamour stocks.”
Over the last decade, growth stocks – led by technology shares – have trounced value stocks large and small, as well as those in international markets.
But that trend has already been thrown into reverse in 2022. It’s not hard to see why.
Valuations in some sectors, asset classes and individual stocks had gone from overstretched to completely out of whack.
Now they are getting in sync with reality, as prices always do in the end.
For instance, I’m all for owning well-managed, disruptive companies.
But I’m not interested in buying Tesla (Nasdaq: TSLA) at 335 times earnings.
Don’t get me wrong. Tesla is a superb company managed by a very smart guy.
The deal killer is that its market cap is greater than the world’s next nine largest automakers combined.
If the firm had a monopoly on the fast-growing market for electric vehicles (EVs), this might be reasonable. But it doesn’t.
That will become more apparent this year as its competitors – including the world’s leading luxury car makers – unleash a slew of attractive EVs of their own.
That makes Tesla ripe for what is known in Wall Street jargon as “a multiple contraction.”
Translation: The stock is likely to underperform the market, as it has since I wrote about this same issue with the company last year.
But my forecast is about a lot more than a handful of tech giants with pie-in-the-sky valuations.
Value: A Sustainable Long-Term Trend?
Fourteen years of ground-scraping interest rates have convinced investors that there is no sense sitting in cash – and little reward in low-yielding bonds.
That premise is true.
Unfortunately, it has motivated investors to bid up entire asset classes to indefensible levels.
You can see this in everything from the frothiness in growth stocks to the complete mania in cryptocurrency and nonfungible token (NFT) markets.
A lot of these “investors” – to use the term loosely – will discover a fact that Warren Buffett cited more than two decades ago…
“Price is what you pay. Value is what you get.”
Investors learned this the hard way in the Japanese property bubble of the late 1980s, the dot-com bubble of the late 1990s, the housing bubble of the first decade of the new century and the meme stock bubble of last year.
In every case, speculators assumed that what went up last week, last month and last year would continue to go up next week, next month and next year.
That can be an unjustified belief with life-changing ramifications.
Eventually, value always outs.
That’s fantastic news for investors who underpay. And devastating to those who subscribe to The Greater Fool Theory.
As in, “I may be a fool to pay this much. But some greater fool will come along and pay even more.”
At some point, a greater fool doesn’t appear. And an investor sees the greatest fool in the mirror.
An Early Head Start for Value
On Wednesday, the Nasdaq – home to many of the market’s most expensive growth stocks – reached correction territory, down more than 10% from its 52-week high in November.
The Dow and S&P 500 have also given negative returns so far this year.
How about the value stocks? They’re holding up fine.
For example, the large cap value, small cap value and international value indexes are all in positive territory for the year.
It’s awfully early to judge 2022 performance, of course.
But a lead of more than 1,400 basis points three weeks into the new year is a pretty good head start.
And, in my view, we’re still early in a sustainable long-term trend.
Click here to watch Alex’s latest video update.