Is the best investment opportunity right now in gold, Bitcoin or the stock market? For me, there’s no contest. Its stocks all the way. And I don’t believe there’s been a better opportunity in stocks and shares for years.
The value of Bitcoin when measured against the US dollar and the pound is well down from last year’s high. And the price of gold has been disappointing this year so far. So it’s possible for poor performance to continue in the years ahead.
But gold may increase in value if other assets struggle. For example, it could make a decent investment when inflation is high. And some investors see Bitcoin as the digital equivalent of gold. So both assets could perform well for investors in the years ahead. But I’m not tempted by either of them.
Businesses potentially create value
You see, the businesses behind shares have the potential to build value. And they do so by providing useful products and services. Indeed, businesses can grow their earnings and assets while I’m holding their shares. And the stock market as a whole has a reputation for being the best-performing asset class over the long term.
Yet the stock market doesn’t move up in a straight line. And over the past few months we’ve seen a nasty bear market for many shares. But that move lower has created what I see as a golden long-term opportunity for me in stocks and shares.
All the negative economic and geopolitical news has made investors worried about the outlook for businesses. And negative sentiment caused share prices to fall. But in many cases, the falls seem to be unjustified. And that’s because companies keep releasing decent trading figures and bullish outlook statements.
However, this isn’t a one-size-fits-all conclusion. Some businesses have been struggling and their lower share prices make sense. Nevertheless, I see the current situation as ideal for value-seeking long-term investors such as me. And conditions seem ripe for traditional research and analytical skills to make a difference. In short, there could be decent long-term gains to be had from careful stock picking now.
A rare opportunity
And the current market is throwing up a rare opportunity to find promising stocks in both the defensive and cyclical categories. In the past, I’ve cautioned about the risks involved in holding cyclical shares. But many appear to be near their cyclical lows. And the next up-leg in operations could be ahead.
Timing an investment in cyclical stocks is always tricky. And it’s still necessary for me to be selective. However, to me, the general economic landscape appears to be supportive of cyclical investments, although I could be wrong about that.
But if I catch a cyclical business at the right time, it could go on to give me multi-year returns that would put some of the best growth companies to shame. However, such outcomes are never certain. And even now I could lose money with cyclical shares.
Nevertheless, I’ve been buying shares in defensive and cyclical names over the past few weeks. And I’m working hard on my watchlist to find more opportunities.
