More opportunities if you are a contrarian

2018 is a relatively difficult year for finding multi-baggers partly due to the following threats:

1. S&P 500 still trades at a trailing price-earnings multiple of 24, significantly above the 10-year average of 15.7.

2. The possibility of a US-China trade war
3. Tariffs on imports will raise costs to US consumers, reducing consumption and raising inflation
4. US 10-year treasury yield has been close to 3 per cent --- a level which a lot of analysts think would signal a significant reversal in equities.
5. The World cup in June 2018 will likely bring down the market by an average of 8.6% if history is something to go by.
6. The likelihood of regulations on social media and technology companies because of mounting privacy issues
7. A rise in geopolitical risks
8. Ongoing tensions in Syria

However, unless you do not have the knowledge to separate the wheat from the chaff, volatility itself can be good to those who know how to respond to it.

I still think there is still quite some time, at least a year or so, for the market to move up but the trajectory will be much more arduous this time compared to 2017. What we can do is we can wait for some quality stocks to be artificially corrected by the market and we can buy them on dips.  

I bought Valuetronics on 30^th April 18 at 74.5 cents apiece when its share price slumped by more than 25 per cent since its Dutch MNC customer reported a 1Q18 earnings miss due to weak sales at its home lighting division. Weak earnings announced by its peers as well as soft sentiment in the electronics and semiconductor sector also contributed to the share price decline. I am confident that I will make a good return being a contrarian.

Valuetronics daily chart

Superphang
https://superphang.blogspot.sg