Sir John Templeton used to quip that “People are always asking me where the outlook is good, but that’s the wrong question… The right question is: Where is the outlook the most miserable? Invest at the point of maximum pessimism.”
If you want deep value and a wide margin of safety then you have to be willing to venture where others won’t. Maximum pessimism is what creates the asymmetric bets where the risk then becomes time and not price, as Richard Chandler puts it.
Looking across global markets today there is perhaps only one industry that fits this bill. Where the outlook is beyond miserable and the stocks within it have either been dismissed by investors or just outright forgotten all-together.
I’m of course talking about marijuana stocks…
Just kidding. No. I’m talking about the shipping sector.
Take a look at the following charts showing the prolonged grinding drop in shipping rates.
The Harpex Shipping Index has been in a steep rolling bear market for nearly a decade and a half.
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https://macro-ops.com/shippers-the-most-bombed-out-sector-of-the-market/