Buying the pessimism: Trying to catch the bottom

Hello Gourab, welcome to this thread. It is always a good place to see where people are pessimistic about, because those are the places where you will get things cheap. So as and when these businesses starts doing well, you get two things 1, Earnings Growth and second PE rerating because of people going from pessimism to optimism. I have observed that people more often than not discard average companies in downturn, And when these average companies post average results post pessimistic times, people become overtly optimistic and write stories about these businesses. That is when people smart people cash out. So I actually love average businesses. And understand one thing that most of the businesses are just average. We must avoid extrapolating good results ( which maybe because of tailwinds) as “THE BEST COMPANY EVER” and similarly in a bad phase too.

1. IT services yes, you listen to TV show and everyone tells you to avoid it. These people are only concerned about next couple of quarters, and whats in the price. Everyone knows that IT is going through slump, Its already in the price, We have to look what we are getting in terms of valuation. THese companies have corrected a lot and I feel some have come to juicy valuations, some look fair to me.

2. Industrial Chemicals, yes you are right, people are pessimistic about this too. Maybe. I personally am interested in National Peroxide, cant say about others, but definitely some of their costs have come down in terms of freight, crude raw materials etc. I think they would give above average results by the end of next 3 years. However I think there is some more room for correction from here on

3.New Age tech companies: I dont understand their valuation. I think they all listed at the peak of Startup Bubble. The bubble has burst. In my opinion they would take a long time to go up before they correct even more. And I see some of them getting acquired too, if they dont work on generating profits.

4. Apparels, I dont know, but US Home textile market is really very pessimistic. COtton prices have corrected, I think somewhere in next couple of years, textile industry will present us huge opportunity. I am keeping my eyes wide open for that.