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Undervalued Asset Classes

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There are some interesting posters on here who seem to know about the markets.

With that in mind I would like to discuss 'undervalued assets'.

What do we think these are in the world today and why?

My thoughts -

1) Japanese stocks - 20 year bear market making them the cheapest market in the world on a P/B measure of 1.2 times or less. Not so great on a P/E basis of around 15-20 but Japanese stocks have always been on high P/Es (60-100) times at peak.

2) Nuclear - Uranium and associated stocks.

What is truely undervalued and hated as an asset class????

Edited by ringledman

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What you're looking for is the equivalent of gold 10 years ago. I've tried but it seems there's a lot of money out there sloshing round looking for the same thing.

It'll be out there somewhere, something that nobody is even thinking about at the moment and I'd be interested to see what others' opinions are on this.

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Well I certainly wasn't thinking about that at the moment so you may be on to something. :o

Maybe companies that manufacture/supply small arms weapons / survival equipment / self defence?.

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Large Cap tech stocks. Microsoft, IBM, Cisco, Dell and others have PEs in the 10 to 15 range.

Or Big Pharma. AstraZeneca, Sanofi-Aventis, and Merck are even cheaper and have dividend yields north of 4%.

Altria, the old Philip Morris, has been one of the great investments of all time over the decades and still has a yield of over 6%

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There are some interesting posters on here who seem to know about the markets.

With that in mind I would like to discuss 'undervalued assets'.

What do we think these are in the world today and why?

My thoughts -

1) Japanese stocks - 20 year bear market making them the cheapest market in the world on a P/B measure of 1.2 times or less. Not so great on a P/E basis of around 15-20 but Japanese stocks have always been on high P/Es (60-100) times at peak.

2) Nuclear - Uranium and associated stocks.

What is truely undervalued and hated as an asset class????

agriculture - hogs, cows, grains - massively below where they were 10 or 20 years ago.

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I don't like the idea of Japanese stocks - the £ exchange rate is dreadful atm (almost halved in the last few years), and one day the Yen will go pop. Debt/demographic problems also make Japan risky.

Solid German companies are the best bet IMO. A good inflation hedge and at the moment the exchange is in our favour because the Euro is being held down by the PIIGS. The Germans are never going to accept a devalued Euro, so whatever currency the Germans end up with is likely to strengthen against ours, and the relative growth prospects of British/German economies/firms are a no-brainer.

Wait for more Euro turmoil, which is definately on the way, and get in on the big stock market correction that is also quite likely (the DAX will follow the S&P down whether it derserves to or not).

That's my shot at wealth preservation - I just wish I had a lot more wealth to preserve!

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Well I certainly wasn't thinking about that at the moment so you may be on to something. :o

Maybe companies that manufacture/supply small arms weapons / survival equipment / self defence?.

Nah Norinco (China's arms manufacturer and heavy engineering company much like kawasaki heavy industries) hasn't been doing very well for years the shares I mean.

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Heavy oil. The easy oil has already been sucked out of the ground, but plenty of the thick stuff in easy reach of existing infrastructure.

Property - soon but not yet :lol:

Japan - too risky imo, a very slow falling knife! The same was said years ago, and it kept on slumping.

Selected telecoms, such as fibre and satelitte internet etc. Getting government attention even in the recession.

Emerging BRIC markets, but not researched specifics yet. Tempted by a BRIC fund of some sort.

Thats my list exausted, i'm sure there is more - there always is :)

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On my tin foil hat days I wonder if camping equipment could be the next bubble.

In time, if I wanted a lump of heavy metal as a doorstop do you think I could swap a Kelly kettle for someone's gold?

•Kelly Kettles for Camping, Picnics, Scouts, Fishing, etc.

NO Batteries, NO Gas - FREE FUEL! Works with any fuel: sticks, dry grass, bark, pine cones, even dry animal dung!

•No open fire (the fire is contained within the kettle & fire base).

•Lightweight, compact, durable & works in extreme weather.

•Camping Equipment For Wilderness Survival, Emergency Preparedness or Disaster Kits

•Carbon neutral green camping.

•No travel restrictions (planes etc.)

•4 sizes available (1.7ltr / 1.42ltr / 1ltr / 0.57ltr)

•Boil water & cook at the same time!

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Japan - too risky imo, a very slow falling knife! The same was said years ago, and it kept on slumping.

What!? Now you tell me!!

I'm just watching them fall (Ireland, spain etc) and we'll see the UK go down in time. After that there'll be prenty of time to exit the Yen.

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The Vietnamese stock market hit an 18 month low this week and bounced off it for the third time.

I started drip feeding in to it this week. It is easily the most undervalued stock market in asia.

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Three areas I'm particularly interested in are:

junior uranium explorers and miners,

junior gold & silver explorers and miners,

junior oil explorers and drillers.

But it's a crapshoot, you could lose your shirt or make 100x profit.

Good post.

I'm also looking at some interesting miners right now - AIM listed penny shares - not invested to date. Researching.

Agree on uranium - not too much to invest in with that - Cameco, EDF, Rio, ETFs. But should be a good long termer.

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Large Cap tech stocks. Microsoft, IBM, Cisco, Dell and others have PEs in the 10 to 15 range.

Or Big Pharma. AstraZeneca, Sanofi-Aventis, and Merck are even cheaper and have dividend yields north of 4%.

Altria, the old Philip Morris, has been one of the great investments of all time over the decades and still has a yield of over 6%

I agree. Personally I prefer UK (large cap/defensive/high yielding/mega caps) as slightly cheaper on a P/E and div yield. Also no USA tax to pay.

However I agree these are excellent buys and believe what Grantham says on the subject, they are not necessarily the 'cheapest' assets out there but probably have the best risk/reward basis of any asset class for the next decade.

i.e. the best possible return for least risk (already down massively on a decade ago).

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I don't like the idea of Japanese stocks - the £ exchange rate is dreadful atm (almost halved in the last few years), and one day the Yen will go pop. Debt/demographic problems also make Japan risky.

Agree. However Japanese companies have had to become so competitive and lean with the Yen so strong. Any fall in the Yen will propel their earnings and subsequent share price.

Also once bond yields go north, Japanese people will flee to the stockmarket. Currently Japanese investors hate their stock market over bonds. This will change suddenly once the proverbial hits the fan I feel.

A weakening currency is bad for a UK investor but I can see a situation where the currency is falling say 10% a year, whilst the market is rising 20-30% a year. Also possible to buy hedged currency Japanese funds.

I also like the possibility of Japanese stocks rising should the 'risk on' market fall. I.e. if the dollar strengthens significantly then Japanese stocks will likely rise.

Edited by ringledman

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Three areas I'm particularly interested in are:

junior uranium explorers and miners,

junior gold & silver explorers and miners,

junior oil explorers and drillers.

But it's a crapshoot, you could lose your shirt or make 100x profit.

The problem I see with these are that the funds all charge hefty fees of 5% or so. Any cheap ways of playing without buying individual stocks that one knows little about?

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The Vietnamese stock market hit an 18 month low this week and bounced off it for the third time.

I started drip feeding in to it this week. It is easily the most undervalued stock market in asia.

I like Vietnam for the same reason (cheap) and also been thinking of topping up recently.

The problem is they are all dollar denominated funds. I dont want to go long the dollar.

Any GBP ways of playing the Vietnamese market?

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I like Vietnam for the same reason (cheap) and also been thinking of topping up recently.

The problem is they are all dollar denominated funds. I dont want to go long the dollar.

Any GBP ways of playing the Vietnamese market?

I'm using a Deutsche Bank ETF provided by Hargreaves Lansdown.

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The Vietnamese stock market hit an 18 month low this week and bounced off it for the third time.

I started drip feeding in to it this week. It is easily the most undervalued stock market in asia.

Even cheaper than the Iranian market? Although I have no idea how to invest in Tehran, I've heard of a few hedgies who have managed to do so.

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I'm using a Deutsche Bank ETF provided by Hargreaves Lansdown.

if I understand the documentation properly, the ETF has a 0.85% annual charge, I guess extracted from the underlying assets daily, and the HL wrapper has a 0.5% annual charge

quite a steep charge for an index

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The problem I see with these are that the funds all charge hefty fees of 5% or so. Any cheap ways of playing without buying individual stocks that one knows little about?

I wouldn't think so. Also, most of these companies are never even going to start mining let alone make a profit. Still there were some amazing gains to be made in 2003/4. A lot of outfits with vague rights in places like Bolivia were 10 baggers in the space of 18 months. Treat them like lottery tickets.

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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