Those of you who have read The Stock Market is For Everyone, and/or regularly follow this blog, might be wondering right about now, “Has Eric been hacked?!” after seeing the title of this post. Not to worry! It’s still me. Read on…
On November 2, 2018, Illumina (NASDAQ: ILMN), the gene-sequencing giant, announced that it would be acquiring its much smaller competitor, Pacific Biosciences of California (NASDAQ: PACB) for $1.2 billion in cash, or $8 a share. The deal is expected to close in mid-2019.
Currently, PACB is at $7.52, which is 6% below the deal price. The reason it’s trading below the deal price is that the acquisition is not expected to close for at least five to six months.
The likelihood that this deal would fall apart is slim to none.
Therefore, if you have money sitting around that you can tie up for six months, this opportunity guarantees that you’ll get a return somewhere between 5 and 6% depending on where you buy it.
In my opinion it’s worth it, if you have the money and the time to wait.
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 has no position in either of the two companies mentioned.
Photo: Eve Livesey.
“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.
How many of you are familiar with the saying “What you don’t know can’t hurt you”?
Well…51 years on this planet has taught me that that phrase could not be any more wrong.
Lacking knowledge, and making choices based on your lack of knowledge, can be incredibly expensive over one’s lifetime. Think about it: how many times have you said to yourself, “…if I knew then what I know now…”? How different would your life be if you had?
This is especially true when it comes to lack of knowledge about how to invest, or about how long to hold stock.
If you’ve read my book, The Stock Market is For Everyone, you know my story.
To all my Wealthy Joe followers – and to those of you who are new here looking for investing ideas – you need to know that investing in stocks is one of the most important things you can do for yourself and your family.
Whether you believe it or not…it’s true. Whether you buy into it or not…it’s true.
I have nothing against real estate. But I’m a stock guy.
My mission is not to encourage you to invest for six months or a year. The best of the best type of investor to be is is one for life! That’s how you will accumulate a fortune. That’s how your net worth will explode.
Commit to invest for life!
What’s your Christmas budget this year?
$1000 or more?
Whatever the amount, take 90% of that and use it for holiday spending. Take 10% and put it aside for buying at least one share of stock.
The amount is not important. Getting started is.
Once you’ve put aside your 10%, head to Amazon and pick up a copy of The Stock Market is For Everyone and learn what to do next!
Hello, Joes and Janes! I hope all my readers in the U.S. had a great Thanksgiving.
In case you missed it, I wrote a post on Social Security over the weekend. It addresses common misconceptions people have about the program. Please take a look if you haven’t yet, and please share the information with your loved ones and others. Thank you in advance!
Over Thanksgiving dinner, I had a conversation with my niece about investing. I knew that she had read my book, The Stock Market is For Everyone. So I asked her whether she had started investing yet.
Her answer was no, because she didn’t have enough money.
I asked her if she could invest $25 per paycheck. Her answer was yes! I excitedly replied that indeed she can definitely start now!
All she needed to do, I told her, was download the Robinhood app and get going! With no commissions to pay, Robinhood is great for the beginner who has little investment capital.
About six months ago, we started a Wealthy Joe Investment fund on Robinhood with $105. We are now up over 150%. That $105 is now $269!
It may not be earth shattering, but it’s all about the compounding. If we keep up this performance, the account will grow quite substantially over the next 10 years.
Have you started investing yet?
If not, why not? Do you think you don’t have enough money to invest?
Start small. With time and patience, your investment will grow.
I want to take a short minute to talk about high beta stocks.
A high beta stock is one that has more volatility than the general market. If the general market has a beta of 1, then a high beta stock would have a beta greater than 1.
High beta stocks will usually have moves much more severe than the overall market – both upward and downward. For example, while NASDAQ is down about 11.5% from its all time highs, Nvidia (NASDAQ: NVDA) is down over 30% from its all time high.
Owning high beta stocks can make it feel like the market is doing much worse than it is. But this is the nature of how these stocks trade. So hold on and don’t panic!
I’ve shared this graphic by Morgan Housel of The Motley Fool here before. I’m featuring it again today because it is very relevant to the current market situation.
Hold on and be patient. History demonstrates it will pay off.