A Note From the Managing Editor: Today’s essay comes from our good friend Adam Sharp. Adam and his business partner Andy Gordon are our go-to authorities when it comes to startups. (And we’re not alone – their free e-letter, Early Investing, boasts more than 180,000 subscribers.) Below, Adam explains how everyday investors like you can get the biggest bang for your buck in this fast-moving space.
Over the last few weeks, I’ve been on the hunt for stock market bargains.
I’m participating in a charity stock-picking contest, and fundamental investing is what I know best.
Well, I’m not having much luck so far.
The S&P 500’s price-to-earnings ratio is currently around 25 (trailing 12 months).
By comparison, the Nasdaq 100 looks reasonably priced at a P/E of 15. There appears to be room to run in tech stocks. But it’s important to remember that today the Nasdaq 100 is mature and massive, being composed of companies like…
- Alphabet (Nasdaq: GOOG) – $584 billion market cap
- Apple (Nasdaq: AAPL) – $650 billion market cap
- Amazon (Nasdaq: AMZN) – $406 billion market cap
- Cisco (Nasdaq: CSCO) – $154 billion market cap.
There are some fast growers in there, but I wouldn’t say they’re necessarily inexpensive.
One of the only markets I’ve been able to find bargain stocks in is Russia, which is fraught with all kinds of risk. Namely sanction uncertainty, currency fluctuations and a dubious future relationship with the U.S.
Still, with Russian stocks trading at an average P/E of 7, it’s attractive compared to many markets.
Overall, I’m not saying markets are priced ridiculously here.
They’re just not cheap.
This is one of the reasons I like startups.
No matter what the public market looks like, there are usually good…