The #1 Investing Mistake to Avoid Now – Investorplace.com
Posted: April 10, 2020 at 2:52 am
My message to you for the last few weeks has been this:
We are witnessing the best buying opportunity in over a decade, and quite possibly the best opportunity in our lifetimes. This may be the last time we see many stocks at these prices.
Historys record is unblemished: From crisis arises opportunity.
This country and the world have dealt with pandemics in the past, and weve recovered every single time.
We have dealt with world wars, terrorist attacks, oil shocks, tech bubbles, and many other crises and recovered every single time.
Buying when everyone else is selling has minted millionaires and even billionaires over the years.
But there is one big caveat
Taking advantage of these once-a-decade or even once-in-a-lifetime opportunities is the whole reason behind my newCrisis and Opportunity Portfolio. Yes, now is the time to be buying stocks but how you do that is important.
Theres actually one huge mistake many investors will make when getting back in. They will invest all of their available cash at once.
I strongly recommend that you NOT do this for a few important reasons.
First, I dont know if the market has bottomed or not. I believe there is a 50% chance that the bottom is in.
Weve seen a big bounce, but markets often retest lows before breaking out firmly. I do know that we are in a sweet spot where stock prices are so attractive that theyre worth buying whether weve seen the bottom or not.
Its much better to start buying now, and then continue to spread your cash into stocks over the coming weeks.
One easy and solid strategy to consider is taking the amount you want to put into stocks and dividing it by five or 10. If you have $20,000 earmarked for stocks, you could buy in $4,000 chunks over five different dates. You could also buy in $2,000 chunks over 10 dates. And you could do this weekly or even every two weeks.
There is no perfect way to do this because that would require knowing the exact day the stock market will bottom or if it already has. Spreading out your stock purchases is smart because you keep some cash in the event there is another downdraft.
At that point, you could buy at even better prices with more upside potential. And if there isnt, you will still have plenty of opportunities in the weeks ahead. Think of buying in right now as a process and not a single moment.
Another mistake too many investors make is picking only one or two stocks they believe will hit it big. A much better approach that reduces risk, lets you be wrong once in a while and can still make you a fortune is what I call thebuy a basketapproach.
I do this even in bull markets. During the early stages of an industry, its virtually impossible to consistently pick the one or two companies out of dozens that will emerge as the winner(s) in 10 years time. Placing all your chips on just one or two companies is often an extremely risky way to invest.
When I say buy a basket, I mean pick several of the best companies in a sector and buy all of them. Or, in this case, pick six to 10 of the best buying opportunities to come out of the sell-off and spread your capital among them.
This is exactly why were doing in theCrisis and Opportunity Portfolio. Our first three stocks are up 21.5% on average in a little over a week, and we just added our fourth stock yesterday. Im lining up additional opportunities for future buys. Through this basket approach, we focus on the top small cap hypergrowth opportunities across the converging technologies of the Roaring 2020s.
Think 5G, artificial intelligence, the Internet of Things, electric vehicles, autonomous vehicles, genomics, precision medicine, and more.
These are the technologies of the future.These are the stocks you want to buy at beaten-down prices.
These companies could very well be the nextNetflix (NASDAQ:NFLX), Alphabet (NASDAQ:GOOGL), or Amazon (NASDAQ:AMZN). And theyre selling right now at fire sale prices.
Its time to start taking therightsteps to get back into the market today. These are the times when fortunes are made.
Matthew McCall left Wall Street to actually help investors by getting them into the worlds biggest, most revolutionary trends BEFORE anyone else. The power of being first gave Matts readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now.Matt does not directly own the aforementioned securities.
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The #1 Investing Mistake to Avoid Now - Investorplace.com
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