It is the hardest thing to do as an investor.
It is also perhaps the most important thing to do if you want to build life-changing wealth.
I’m talking about buying stocks when everybody else is selling. Or, as Warren Buffett famously put it:
We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
Believe me, I know it’s much easier said than done. Our brains are wired to avoid danger, so our gut reaction is to join the panic and sell.
But if you can put the emotions aside and let logic, analysis, and market history guide your thinking, you learn that market crises produce some of the best buying opportunities you will ever get.
We’ve just learned that lesson again in dramatic fashion …
I never “call” market bottoms. Nobody should even try. It’s a fool’s game.
But when stocks of good companies get pushed down to crazy low prices they may never see again, it’s time to buy.
When I shared my Crisis and Opportunity Road Map on Friday, March 20, I had no idea stocks would hit a bottom the next trading day on March 23. But here’s what I told my subscribers:
I know it’s scary out there. I know the headlines are terrible. I know stocks are down big. But as I’ll detail in a moment, now is NOT the time to panic. Instead, I urge you to follow Warren Buffett’s advice … and see this time of extreme fear as a time of great opportunity.
The timing ended up working out almost perfectly, but timing wasn’t my goal. Helping people make money was. I laid out four phases on the Recovery Road Map back to all-time highs:
This past week, the NASDAQ 100 index surpassed its all-time high from February. The chart looks pretty familiar, don’t you think?
To be honest, we’re getting back to highs faster than I thought we would. But once again, it’s not about the timing. It’s about thinking rationally and putting yourself in position to make money.
To help with that, my goal was to create a long-term portfolio of stocks that had fallen to extremely undervalued levels. I knew some areas of the economy might never come all the way back, but others had — and still have — the same hypergrowth futures they did before the pandemic. The only difference? They were cheaper. A lot cheaper.
Those were the stocks we put in our Crisis and Opportunity Portfolio. We started with three names on April 1 and have since added four more as we spread out our cash deployment to lower risk. The stocks are now about 25% on average in a little over two months.
Six of the seven stocks are up, led by a 76% surge in a software company using artificial intelligence to discover drugs quicker and cheaper and a 45% rally in an under-the-radar company whose software and processors are helping power innovations like 5G, augmented and virtual reality, the Internet of Things, and more.
We’re not done yet. There are still opportunities out there resulting from the crisis, and I expect to add another couple of stocks to the Crisis and Opportunity Portfolio in the coming weeks.
I typically avoid quoting Warren Buffett simply because so many other people do it. My subscribers pay me to think differently than the herd. But the man is an investing genius who has amassed one of the biggest fortunes in history by investing in great companies for the longer term.
Ironically, people everywhere quote his “be greedy only when others are fearful” line. You’ll also hear, “The time to buy is when there’s blood in the streets,” credited to Baron Rothschild. Both made fortunes.
A lot of people quote those two gentleman, but most investors find it incredibly difficult to actually do what they say. That’s why I was so thrilled to receive the following response when I congratulated all those who followed the Recovery Road Map on Twitter yesterday.
Thank you, John. You summarized the experience of nearly every investor in just three sentences.
It’s easy and even understandable to panic in times of chaos. But panic is the enemy of wealth creation. We’re on the path to real wealth when we think logically, build a portfolio based on research and analysis … and then stay with it.
That’s how to be very happy with — and get very rich from — the results.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s 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.