I think I found an undervalued ticker after all
I found one stock that is relatively cheap, and that is a pseudo-stock. My today's choice is TIP. It gives you exposure to government TIPs with the average maturity of about 9 years. Unlike other expensive junk, it hasn't rallied at all this year. But the reason to own it is very compelling. Stock market is telling us that it expects huge inflation, otherwise stock valuations don't make sense. But the TIPs market disagrees, suggesting inflation on the order of 3%.
At the current price, TIP offers a good margin of safety. Unless you expect inflation to be under 3%, the price shouldn't go much lower. If inflation hits 4-5%, then TIP should perform very well. And also, if TIP fails to perform, then S&P should have a pullback because inflation is priced in. Enjoying a small but still positive return while everybody else has his equity portfolio going down? One can certainly do much worse than that.
At the current moment, I don't see a large risk of default. Even though the government is behaving like a typical Ponzi borrower, it still has at least a decade during which it can increase deficits without anyone noticing. But if deficits keep growing too fast, it could become a concern. A second major risk is a change in accounting methods that would understate CPI by more than the current 0.7-0.8% per year. Any news to that effect should be a reason to sell. Having said that, I still like TIP at $104 much better than I like S&P at 1200.