Do This, Make Loot
Oh that's much better...
On Monday, I wrote:
I'm already seeing tweets and other commentaries that today's [Monday's] drop is an overreaction, that the bull market is more powerful than any virus or politician. The suggestion is basically that today's move is a crescendo that will relieve the overbought pressure, many will panic sell and thus clear the air for new buyers.
It doesn't seem like a good idea to be so casual about this sell-off. There are some tremendous imbalances in the market and the economy. The S&P 500 hit a new record high at 3,393 on Thursday. Do we really think a big drop today down to 3,200 is capitulation? Umm... yeah...
I was around for the Internet bubble and collapse and the ensuing 9/11 bear market. I survived the financial crisis, too.
I know that a lot of new investors (millennials) have entered the marker somewhat recently. If you're reading this, let me tell you: Brother, this ain't capitulation.
Yesterday, when the CDC came out and said that the U.S. should get ready for the virus to spread here, the Dow plunged about another 1,000 points. The fear in the air was palpable...
I'm not going to tell you that yesterday was the capitulation day and we're all good from here. But I will tell you that yesterday's panic move will make a nice rip higher a LOT easier to achieve.
Better Lucky Than Good
One of my favorite quotes is from Louis Pasteur. I know, I've written it before. I repeat it because understanding that "fortune favors the prepared mind" is the very essence of investing.
Of course you can never be 100% sure an investment or trade will work out; there are simply too many variables to account for, many of which are completely unrelated to a company's fundamentals...
Like a nasty virus sweeping the globe.
It's times like these you find out just how prepared you were when you were putting your money to work.
That does not mean that you should try to craft your investments so that you can survive some kind of disaster. Nobody can do that. And when the virus hits the fan, your stocks are gonna take a hit, too.
But if you've made good decisions, there will likely be some nice surprises as well.
Like yesterday, as the CDC was putting the fear of God in us all, Nancy Messonnier, the director of the CDC’s National Center for Immunization and Respiratory Diseases, said that hospitals may have to ask patients to delay elective procedures and conduct other appointments using telemedicine.
Well, Jason and I recommended Teladoc (NYSE: TDOC) to our Wealth Advisory subscribers in August of 2019. It's exactly what it sounds like, and we got in at $59.87 a share. Yesterday's little nugget from the CDC added $4 to the price, pushing it darn close to $120.
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$4 is always nice. But, more importantly, the news adds a new level of validation to the business model. Investors will remember that if/when there is an earnings miss or some other incidental negative.
It's not always easy to look at a sector and get a read on where it's going or what its future looks like. Retail is a great example here. The devastation of traditional retail was not anticipated by many, including CEOs and board directors. And the turnaround wins by Target (NYSE: TGT) and Walmart (NYSE: WMT) were equally surprising — at least to me. I mean, groceries?? I kinda laughed at the idea when it was first touted. Turns out that was the savior.
PRO TIP: Ego shows up in investing often. It's pretty much never helpful. So anytime you laugh at or otherwise dismiss a significant strategic move by a company, it is a sign that your mind is not prepared, that you need to research more.
But Wait, There's More
I've already regaled you with our move into Gilead Sciences (NASDAQ: GILD) in the January issue of The Wealth Advisory. (That's a sarcastic "regaled," by the way. You're probably getting a little sick of me talking about Gilead.) We got it in at $64 and change. That $7 gain is nothing to write home about, but, new developments have validated the notion that the recent years of pain for the stock are likely over.
We've seen a little of our reward so far, but the risk side of the equation has gotten a lot smaller. I like that.
That's where we've been and where we are now. But here's a little peak at where we're headed...
5G. I know, it's all big companies, like Qualcomm and Verizon, right? Well, not exactly. A couple years ago, I uncovered what may be the most significant 5G player that no one's ever heard of. You know how much it sold off this week?
Okay, I honestly thought the answer was gonna be zero, but it's actually 2.7%. Meanwhile, it has rallied around 50% over the last month. I think it's on its way to being one of those big 5G players like Qualcomm and Verizon. And speaking of Verizon, this behemoth has already contracted the services of the 5G stock I'm talking about.
You can't get this little gem under $10 anymore, but it's still available under $11. And, you're gonna need to move fast if you wanna catch it there. Here's how.
Until next time,
A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.
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