Just as a high tide lifts all boats, shares all across the FTSE 100 have plummeted following the Covid-19 outbreak. Sure, the UK’s premier share index might have recovered strongly from the depths in late March. It’s currently up 25% from those decade-long lows. But there remain a whole load of great Footsie shares that remain wildly oversold.
To quote the legendary economist John Maynard Keynes: “Markets can remain irrational for longer than you can remain solvent.” But rather than grumble, I’d argue that the strange slump in many share prices provides an exceptional once-in-a-lifetime opportunity to grab some choice bargains.
The Bitcoin ‘gamble’
Ah, but wouldn’t I be better off using my money to buy into Bitcoin instead, you may ask? The virtual currency was washed out just like the FTSE 100 as coronavirus fears spread. But the bounceback here has been even more spectacular than that of the Footsie.
Since mid March Bitcoin has more than doubled from its Covid-19 troughs and was last trading around the $9,500 marker. Like the FTSE 100, crypto assets have benefitted from rising risk appetite as lockdown measures have been unwound in major economies, and central banks have continued printing money like it’s going out of fashion.
Could Bitcoin have further to go? It’s quite possible. I wouldn’t be surprised to see it double again by the autumn. However, I wouldn’t be shocked were it to halve in value over the period, either. And therein lies the problem with the new-age currency. It’s prone to wild price swings that on most occasions follow neither rhyme nor reason.
As I say, the FTSE 100 has been extremely choppy of late. But one can understand why share pickers are jittery. The global economy faces the biggest downturn since the 1930s, after all. Volatility in Bitcoin is common during both good times and bad. It removes the need for sound investor thinking and makes success or failure more of a question of mere timing and luck. I for one am not prepared to risk my hard-earned money on an asset class where shrewd decision making plays no part.
Some FTSE 100 bargains
Besides, at current prices there are a galaxy of FTSE 100 stocks I think are too cheap to miss. Some British blue chips carry the sort of low valuations that could turbocharge overall returns for long-term investors. So why take a chance with choppy Bitcoin?
Take GlaxoSmithKline as an example. This particular Footsie stock trades on a forward earnings multiple of just 14 times while it carries a monster 5% dividend yield for 2020, too. It’s in great shape to deliver big investor profits in the years ahead as a rising global population and booming healthcare spending in emerging regions drives demand for its drugs.
Or what about DS Smith? This FTSE 100 stalwart can expect demand for its environmentally friendly packaging to keep increasing as its critical e-commerce market steadily expands. And this big cap carries a price-to-earnings ratio of 11 times for 2020 and a bulky 4.5% dividend yield. But don’t worry if you don’t fancy either of these; there is a huge selection of cut-price Footsie shares to choose from at the moment.