Three Sectors to Watch for ASX Small-Cap Stocks: Opportunity In A Crash

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I recently posted some stuff via my ‘Business Page’ on Facebook. It’s just my non-personal page that I put stuff up on to reach people through Facebook.

Honestly, I despise Facebook and I never use my personal page. But so bloody many of you are on Facebook still! So, in order to reach you and to find others out there like you, it’s kind of a necessity.

Anyway, I’m on there and as I say, posted some stuff on there.

The gist of it was, in these kinds of markets there are a whole range of stocks you can be looking at and keeping an eye on.

In market crashes sometimes the best opportunities can be found.

This is not a time to panic. It’s a time for ACTION. Click here to download your free report now.

And boy, does Facebook giveth back the fire when you post stuff people don’t like!

Some of the terminology included, ‘vultures,’ and ‘profiting from people’s misery. Karma will come back at you,’ and ‘get f….d.

Just some of the tamer ones.

I found these to be an interesting take on the message I was trying to get across.

Someone even suggested the stock market should be suspended so people can’t make money off others’ misfortune.

I (kind of?) get where some of these people are coming from. But at the same time, we don’t choose what market conditions are thrown at us. We only get to deal with the situation day-to-day and use our skills and experience to dig out the best stocks to make money from.

Not sure how that’s profiting from people’s misery…

But then again, I would also expect there’s a fair bit of misery from those commenting anyway. And they might be struggling, so when they see posts on strategies and opportunities to make money, it might be a reminder that they don’t have much?

I don’t know. But I wish there was a way that every single person out there with even just a few bucks can make a bit of money.

Unfortunately, that’s not always the case. But it can be the case.

The world as we know it, not as we know it

You see anyone can invest in the stock market. Everyone should invest in the stock market. And for that matter, (almost) every person with a superannuation fund is invested in the stock market.

That’s why it should be a part of everyone’s interest to know what’s going on and where opportunities exist to make some money.

‘I would like to have less money,’ said no one, ever.

Of course, when a global crisis hits and things get pretty bad, it’s easy to switch off and decry the greed of the markets.

But the companies that exist on the markets are in the most part responsible for the world we live in today. Without them, many people wouldn’t enjoy the freedoms and lifestyles they have.

That’s just how the world works.

However, not everything is hunky-dory. There are companies that abuse the system. They do harm to the world, to society, and they profit from the misfortune of others for real. Those usually don’t last long, or at least won’t last much longer.

In a free market, the theory is that the bad actors are weeded out over time. And those that are unable to succeed will fail. And we let them fail, so better, more effective, more efficient, and more successful operations will replace them.

That’s the theory at least.

But with much manipulation from central banks and governments in the markets, the idea of a ‘free market’ doesn’t really ring true. Hence often bad companies are propped up. And those that we should let fail are kept alive.

This comes down to short-termism and forgets about the long game for the more efficient operation of markets and economies. These bailouts, prop-ups, and handouts are what we often call kicking the can down the road.

And this can-kicking applies to failing companies, failing governments, and failing monetary theory.

Which is why there’s a strong argument that after this crisis the world isn’t going to be the same ever again. And if it’s not, then you’ll want to make sure you’ve positioned yourself in the right way to make sure it doesn’t eat you and your wealth up.

There are a few ways to look at it. And I’ll tell you about one in a minute. But today you’ll likely get a note from Shae Russell about another way to position yourself. When you get the note, open it, read it, and pay attention to what Shae has to say.

It could be one of the most important pieces of information you’ll get during this crisis.

Think about it…really think about it

I want you to take part in a small thought exercise for me.

Read this next sentence, and then for a minute or two, close your eyes and really think about it…

Picture a world where SARS-CoV-2 is just another part of the coronavirus family, we have a vaccine that we get annually with regular flu shots and social contact is exactly like it was in the years before this kicked off.

Now think about it…really think about it.

You back?

OK, what did that world look like to you? Pretty similar to the world that we had around Christmas time last year? It looks like that to me when I do this…

And that’s exactly what I would expect our world to be like again come this Christmas.

I’ve said before, in December when we’re smashing down some turkey, roasties, and a bucketload of wine, we’ll look back on this year with bemusement.

We’ll look at what happened with shock, disturbance, and quite possibly anger.

Anger because of some of the heavy-handed reactions and approaches to the whole situation. The way it’s been economically handled will be studied for decades to come. And I will say it again, I don’t expect that this will be wildly different to the H1N1 pandemic from 2009.

Of course, I’m not a virologist and not an infectious disease expert. But post-outbreak research suggests that at least for now, H1N1 infected more and killed more. And yet the economic response back then wasn’t anywhere near what it is today.

Is that because the pandemic came after the crash? Maybe. And one day we’ll have a clearer idea. But what I’m suggesting is that by the end of the year, the world will be mostly back to what it was before…at least from a social aspect.

You’ll be able to have Chrissy at a restaurant or a pub. You’ll be able to do your shopping last minute, Boxing Day will be a wild ride again. Sport will be back, friends will be seen, and families will be hugged.

If that’s the case, you have to look at some sectors and the stocks within them and also ask, where is the opportunity in small-cap stocks?

Should things click back into place post-crisis, where might there be bargains right now?

Well, I’d be looking at REITs and real estate-focused stocks. I’d be looking at food and hospitality. I’d be looking at retail. All smashed hard, but all with some great companies that are a fraction of the price they were just a few months ago.

That’s where really big opportunities will come. At least that’s my very contrarian take on it.

And I’m looking at every single stock that exists in those sectors as potential opportunities.

That’s not to say it’s shooting fish in a barrel just yet. But if you’re a stock picker, and you know what to look for — these sectors are ripe for the picking.

Now might not quite be the right time, but it will be pretty damn soon. And you’ll want to make sure you’re ready to go when that turning point really locks in.


Sam Volkering,
Editor, Money Morning

PS: In this free guide, discover how a currency crisis could drain the supply of circulating cash…and how you can keep your standard of living when going through it. Download the free guide now.

About Sam Volkering

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’…

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