Investment Opportunity: It’s Time to Be Greedy

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I sometimes wake up in the middle of the night and can’t get back to sleep.

stimulus checks

Source: Shutterstock

As a total stock market geek, I turn on the television and watch the markets in Europe open. It’s fun for me. What can I say?

This happened to me earlier this week, and as I was sitting there watching the coverage, I realized that 95% of what I was hearing was negative. It was all being said in nice British accents, but it was still negative.

That drives me crazy … which, of course, makes it even harder to go back to sleep.

Some of you may be losing sleep of your own right now over the recent market action — especially after the dramatic sell-off in February and March. I’ve gotten phone calls from some money management clients wondering about what’s going on.

Here’s what’s going on: This is one of those times that separates the good investors from the great investors. Let me explain …

Let’s face it, this headline isn’t going to generate much interest:

Stocks Pull Back And Everything’s Fine

It won’t boost ratings or get people to click on it, sure. But it would be a heck of a lot more accurate than a lot of the headlines out there right now.

The truth is, pullbacks and even corrections happen a lot more than investors realize. And yet, too many people freak out and make bad decisions even in normal circumstances — much less a few months after the quickest bear market in history.

Corrections (a drop of 10%-20%) typically happen twice a year, with the average drop around 13%. They’re normal — especially after the run we’ve had — and they’re healthy.

They’re also buying opportunities … not selling opportunities.

This is when you set yourself up to make real money. This is when average investors can become great investors. This is a time that separates investors who build true wealth from those who never seem to get where they want to go.

Let me show you a couple of charts. The first illustrates how much stocks, gold, and bitcoin have gone up in the last six months — even with the recent pullback. The Nasdaq 100 and bitcoin are both up more than 50% (and select other cryptocurrencies called altcoins have done even better).

Keep those gains and how each kept making new highs in mind as we look at another chart with those same four investments. This is one of my favorite charts right now. It shows what percentage the S&P 500, Nasdaq, gold, and bitcoin have come off their highs over the last six months.

The first thing I want you to notice is the top line, which represents new highs along the way up. What jumps out at me is how much time was spent at new highs over the last six months, especially by stocks.

Just by looking at the S&P 500’s purple line, we can see that this is the fourth time in six months the index has dropped more than 5%. And the first three times, it went right back up to new highs.

So what do these charts tell us?

That stocks pull back. It’s a fact of life when it comes to investing.

Right now, a lot of strong stocks have pulled back and are sitting on solid support levels … but nothing has changed in the business model. They’re still in hypergrowth trends.

The only thing that’s changed in the last few weeks is that you can buy them cheaper!

That’s the definition of a buying opportunity.

The same rationale applies to bitcoin and other even more promising cryptocurrencies — but to an even greater degree. As you probably know and can certainly see on the second chart, bitcoin is more volatile than stocks. Its pullbacks tend to be steeper, but you can see that it also went back to new six-month highs each time.

The long-term outlook is spectacular. Over the last 10 years, the blockchain’s success has been mostly tied to the success of bitcoin. But people are starting to wake up to its true potential and how it will transform so much of our everyday lives.

When I pulled the above charts, bitcoin was 16% off its high. That’s like buying a $10 stock for $8.40. If that stock then doubles from its high to $20, you’ve made 138% instead of 100%. The higher it goes, the more of an impact that lower buy price has.

So yeah, buying on pullbacks can make a difference … a BIG difference.

Sometimes it seems like the media goes out of its way to make us feel bad for being bullish on stocks. The heck with them. It’s okay to be bullish. It’s okay to make money. It’s even okay to be a little greedy when it comes to your investments.

Right now, it’s time to be greedy and buy strong stocks and select altcoins at cheaper prices. Soon it will be too late.

On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now


Article printed from InvestorPlace Media, https://investorplace.com/moneywire/2020/09/investment-opportunity-its-time-to-be-greedy/.

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