The Best Buying Opportunity in a Decade
Back from 1999-2001 and then again from 2008-2009, the tech markets got routed. Many companies fell by between 70% and 90%. Most deserved it. But many did not.
They got caught up with the selling and the lack of confidence.
The same is happening today. Higher interest rates are a killer for tech stock valuations, as the share prices are predicated on high growth. High interest rates kill growth – but not permanently. That’s what everyone forgets.
In the frenzy to rush for the exits, the good gets tossed out with the bad. The profits don’t matter. The cash on the books doesn’t matter. The future doesn’t matter.
That is when you should get your list ready and start dipping your toes in the water. That first dip should be now, and you should follow a plan that allows you to dip in three more times over the next 12 months.
Why the next 12 months? Well, no one can predict the bottom – not me and not anyone I know. Sure, you can get lucky calling a bottom once in your lifetime… but I have yet to see that happen twice!
So, follow this strategy. Buy the best stocks in four tranches: the first today and the next three at 10% intervals. 10% of what? Each 10% dip in the price of the stock is when you buy another tranche. That means your final tranche will be 30% lower than current levels, on top of the already-huge drop in the price.
Which stocks should you be buying now for your first tranche? You buy the dominators – the companies that are cash-rich and have huge market shares. Here is my list:
– Apple (AAPL) – the dominator in smartphones and the smartphone ecosystem
– Amazon (AMZN) – the dominator in online commerce
– Google (GOOGL) – the dominator in online advertising and search
Start with these three stocks. Use the strategy mentioned above and buy in four tranches. My bet is that five or 10 years from now, you will be looking back with a very big smile and a lot of extra bucks in the bank!
And speaking of long-term value stocks, I’ve been following a company over the last year that I’m very high on. I’ve even dubbed it “The Last Great Value Stock” because it has a foothold in many tech sectors. The best part – you can get in on it now for under $1.
P.S. I will be following these three from time to time on Twitter… just to keep myself honest! Follow me @tradeforreal.
FUN FACT FRIDAY The hunt for quality stocks continues… As we head toward the end of this earnings season, stocks raising forward guidance are the ones to add to your watchlist. As you can see in the chart below, earnings are becoming increasingly important to performance. Companies with higher earnings revisions have been consistent outperformers since July.