When Being Out Of Favor Can Do You A Favor!

Good morning!

Sometimes the best time to invest in a stock is to buy when no one else is looking.

What I mean by that is to buy when the sentiment is negative. Over time, stocks will go through periods when everybody loves them and periods when everybody hates them. These feelings are called market sentiment.

Why is buying when sentiment is low a good idea? Can you take a guess?

If you’re a regular reader of this blog, you may have guessed that buying when sentiment is low is a good idea because the stock price will be lower. You guessed correctly!

Now, keep in mind that in a case like this, the company is still a great business with a bright future.  It’s merely the poor sentiment that is pushing the price of the stock down.  That is okay.

Here are three companies with poor sentiment currently, but great future potential:

1. Facebook (NASDAQ: FB): The social networking giant had a rough 2018. The company was under intense scrutiny due to the Cambridge Analytica scandal and privacy issues.

Facebook was the darling of Wall Street up until this point: the stock had gone from $65 to $218 over the five years leading up to that, and could do no wrong. Today it sits at $163, down 25% from its all-time high – and it’s one of the most hated stocks on the market.

In spite of whatever you may feel about Facebook, its future is still incredibly bright. I think it might be wise to pick up some shares at these prices.

2. Tesla (NASDAQ: TSLA): Tesla is the leader in electric vehicle sales as well as autonomous driving. Last year, Tesla stock basically went nowhere, for a number of different reasons.

There was concern that Tesla would not be able to meet the production level set by their CEO, Elon Musk, and that the company, which up until the third quarter of 2018 would report a significant loss, would possibly have to raise capital. Instead, Tesla reported a profit.

Also, Musk got into trouble with the SEC (Securities and Exchange Commission) because of a tweet he made about taking the company private. Tesla has since settled with the SEC and put that issue behind them.

ARK Invest is projecting electric vehicle sales to increase by 20 times over the next five years. This would increase sales from 2.6 million in 2018 to 26 million in 2023!

3. Nvidia (NASDAQ: NVDA): Nvidia is the leader in GPUs (general processing units), which are used in gaming and for artificial intelligence. Over the next five years, the projected growth for artificial intelligence is expected to be 25% per year. Nvidia will be a huge beneficiary of this growth.

Last year, Nvidia reported a terrible third quarter. They also lowered their profit numbers significantly because of excess inventory due to the collapse of the cryptocurrency markets. This resulted in the stock price going down by more than half, placing the company in Wall Street’s penalty box.

This could be a great time to pick up some shares of a company that will be a leader in one of the biggest trends of our lifetime!

Disclaimer/Disclosure Statement: Information in this article is not intended to be a recommendation to invest in any stock.  Rather, it is presented for readers’ education and consideration when making their own investment decisions.  The author is long NVDA.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

 

 

 

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Will We Have A Bear Market In 2019?

bear market 2019

Photo: Eve Livesey.  

Good morning.

“Are we in a bear market?”

“What should I do if we’re in a bear market?”

As the end of the year approaches, you will start to see many financial newsletters calling for a bear market in 2019…especially considering the way the second half of this year has gone.

Throw in the potential Fed rate hikes, as well as the trade spat with China (reportedly resolved as of yesterday, but who knows?), and you have a recipe for a recession – which could lead to a bear market.

The truth of the matter is that no one knows for sure as to what next year will bring.  I wouldn’t be surprised to see the market continue to move higher, and a bear market wouldn’t shock me either.

The last bear market we had was between 2008 and 2009.  It lasted for 15 months.  Since the 1930s, the U.S. stock market has had eight bear markets, lasting 1.4 years on average.

So what should you do if there’s a bear market?

It depends.  If you need your money in the next three years, you should probably take it out of the market.  If this year has taught you anything, it’s that you never know when a market sell-off is going to happen.

If your time frame is more long-term, which I hope is the case, then do nothing.  If you are a regular investor, and you have a fixed amount that you invest each month, then continue to do so.  If we have a bear market, you will have bought stocks at some very good prices.  Do not listen to the pundits that tell people to jump in and out of the market because they believe a bear market is coming.  I said it before and I’ll say it again: it is impossible to successfully time the market.

We here at Wealthy Joe are long-term investors.  We don’t let a sell-off or bear market scare us out of owning great businesses for the long term.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)