Is April a can’t-miss opportunity to get rich with cheap shares?

Many cheap stocks live in the London stock market today. And last month, well-known fund manager Mark Slater sent a message to investors after his fund – and I was one of them.

In short, he thinks there is good value in stocks and shares right now. And the bear market is likely to be nearing its end. So that means the next bull phase for stocks may be coming.

Bear markets are old

According to Slater, the bear market that started at the end of 2021 is getting old. And it has led to a de-rating of value for many stocks.

The Slater fund hasn’t had so many companies at single-digit price-to-earnings multiples since 2008-9. And, of course, during the financial crisis of the decade.

But in some ways, the economic and geopolitical situation has been as challenging as the past. And Slater pointed out we have even seen problems in the banking sector.

Investor pessimism is running high. And Slater thinks we are in a phase of disillusionment. But this could be a good thing, suggesting the possibility of better times ahead for stocks and shares.

Slater quotes one-time fund manager Sir John Templeton: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” And Templeton is known for investing at the point of maximum pessimism in the market.

But Slater added that the bear market killed the euphoria of the previous phase. Then they grind away the remaining optimism until almost all market participants are very pessimistic.

And the bottom line is that there is a high probability that a bear market is now imminent, given the current bearish mood.

Looking for value

However, Slater insists that he does not entertain market timing in the fund. Instead, they aim to buy shares in businesses they know. And only if they have the potential to increase their income over time.

Importantly, however, he added that the majority of businesses in the fund will continue to thrive despite the challenging economic environment. Although he admits that some may see his growth rate as slow.

Instead, they will improve their competitive position by gaining market share, or with lower cost acquisitions.

Although, so far, some of the companies in Slater’s portfolio have been struggling. But that’s the problem “temporary or fixable”.

Meanwhile, as companies increase earnings while their valuation multiples fall, they get cheaper and cheaper. And that situation is unlikely to continue. Sooner or later, the stock will rise to accommodate the building value in the business. And that’s how bull markets tend to start between the last gasps of bear markets.

To me, Slater’s observation means it’s a good time to buy something good. And April may prove to be an unmissable opportunity to strike it rich with cheap stocks.

But remember that all stocks have risks as well as positive potential. And it includes trading business at low cost.

However, finding good value in the stock market is a good starting point when aiming to build a diversified long-term portfolio.