BUY BUY BUY!!
That is what I will be doing over the coming weeks during these market dips. The stock market has obviuosly gone a new path, not only on inflation fear. But clear inflation data.
“The Consumer Price Index, which measures a basket of goods as well as energy and housing costs, rose 4.2% from a year earlier. A Dow Jones survey had expected a 3.6% increase. The month-to-month gain was 0.8%, against the expected 0.2%.”– CNBC News 5/12/2021
In April inflation numbers which are shown in all types of consumer prices, rose significantly. This has investers worried if the FED has everything under control. The FED stated last week they are mindful, but honestly this number is higher than I anticipated. More downside is expected in stocks
Check out a post I did last week, when it was just inflation FEAR running the market. Not data.
Take A Step Back
Remind yourself of what your investing goals are. For most, it will be to buy and hold for 5,10, 20 plus years. In that case, this is nothing to worry about at all.
It is just a small part of your big investing timeline.
Growth Stocks Are Getting Hurt The Most
If you take a look at all stocks you will see a clear descrepancy beween growth and value companies.
Growth stocks are stocks which are speculated to give higher percentage returns. Their market caps tend to be lower, which is why they have a lot more upside.
- Penn National Gaming
These companies need to take on a lot of debt/loans to propel their business. When inflating rises at high rates this debt becomes tougher to pay off. That is why these companies may struggle for the time being. Investers fear if the company will be able to pay back loans efficiently.
Value stocks are ones that have been around for a long time. They have a commanding position in their sectors and are proven to be profitable year by year. Their returns are lower making them conservative investments.
- Johnjon & Johnson
These types of companies are GIANT brands. They dont have a lot of debt, so inflation does not matter as much compared to growth companies. But some are subject to concern depending on what kind of service they sell and how prices react to inflation.
How To Capitalize
Before you go and buy a ton of stocks there are some things you must consider.
- How long do YOU personally think this correction will last?
If you think it’ll end this week, then buy now. In 3 months, then maybe take a back seat and see how things play out.
- How is the company you want to buy comparing to it’s competitors?
This is an EXTREMELY IMPORTANT one. Look at how much the company is down percentage wise vs. competition. Since the top of the market. (May 10th.)
This will give you some insight on how well a company is positioned. If your company is down worse than its predeseccors, maybe it isn’t the best choice. Maybe it’s business flaws are finally coming to fruition which investers are seeing and taking action of.
Examples are… Zillow vs. Redfin, AMD vs. Nvidia, Roku vs. Netflix, cruiselines, airlines, Starbucks vs. Dunkin Donuts.
- Dollar Cost Average into positions. (DCA)
This method is buying small portion sizes of a stock every week, month, 3 months. To try and get the best possible price. It is too stressful and difficult to predict the bottom of a stocks price and buy there. Instead buy a little bit every so often as this market mess continues. Ensuring you establish a good position.
STOP Looking At Your Portfolio Everyday!!
All this does is give you stress and anxiety seeing your returns drop. Are you in it for the long haul or not? Your returns will be INSANE in 20 years, dont let this bumb in the road detour you off course.