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Investment Opportunities

Time to Buy the Market Drop… or Sell Before the Next One?

  • Right now, every investor is asking the same question: Is it too early to buy… or too late to sell?
  • Today, Alexander Green has some important advice that wealth builders need to know.

Over the weekend, friends and family came out of the woodwork to ask me the same two-sided question: Is it too early to buy… or too late to sell?

That depends, of course, on what you’re thinking about doing.

For example, food companies, drug companies, utilities and defense contractors will be largely unaffected by the coronavirus. (Even if their share prices have not been.)

Hotels, airlines, cruise lines, brick-and-mortar retailers, and restaurants are bracing for harder times.

And some companies – like Netflix (Nasdaq: NFLX) and Amazon (Nasdaq: AMZN) – would actually benefit from more people staying inside.

Everywhere around the world, people are monitoring developments and incorporating the news into share prices immediately.

While there is bound to be more volatility ahead, the greatest risk right now, in my view, is listening to hysterical voices.

And they are getting plenty of airtime.

The media love a good story, and the scarier and more sensational, the better.

(That attracts more eyeballs, ears and clicks, and, of course, more advertising dollars.)

I’ve heard plenty of coronavirus news lately, but I’ve heard precious little context. Except for the melodramatic kind.

Yes, 50 million people worldwide died of the Spanish flu a century ago.

That’s a sobering fact for those who didn’t already know it. But what does it have to do with today’s coronavirus epidemic?

Mass communication didn’t exist back then. Neither did modern medicine.

Indeed, less than a century ago, Calvin Coolidge was in the White House. His son Cal Jr. played tennis without socks, developed a blister and died of the infection a few days later.

Tragic events like these were routine at the time. There was nothing the best doctors in the country could do for the son of the most powerful man in the world before the discovery of antibiotics.

Yes, the world is far more interconnected than it was a century ago. But that is not all bad.

The genome of the virus has been posted online, and the world’s top laboratories, universities and biotechs are hard at work on a solution – and sharing their findings immediately.

Friday night, I had dinner with my old friend Dr. John Reed, head of research for Paris-based Sanofi (Nasdaq: SNY), a leading drug company and the world’s largest maker of vaccines.

He noted that everyone is still trying to get a grip on this thing and, even in a best-case scenario, a vaccine is at least a year away. So expect uncertainty to reign in the weeks ahead.

What should you do with your portfolio?

You might start by listening to the most successful investors on the planet, a habit that has served me well over the past 3 1/2 decades.

Last week, for instance, Warren Buffett noted that he had seen many sudden market drops over his 66-year career at the helm of Berkshire Hathaway and he’d viewed each of them as a buying opportunity.

I also endorse comments made by Ron Baron in an interview in Barron’s on Saturday.

Baron, who co-manages Baron Growth (BGRFX), Baron Focused Growth (BFGFX) and Baron Partners (BPTRX), is a longtime market beater.

He isn’t worried about the short-term risks posed by the coronavirus.

“Being a long-term investor,” he said, “I don’t worry about the news.”

It’s worth pausing a moment to note that while the average investor obsesses over every “news flash,” these two world beaters routinely ignore them.

They’re looking beyond the dark clouds of the coronavirus and its very real short-term impact on the economy and financial markets – and the view is sunny.

As Baron said…

We’re going to do better in the future than we have in the past. Because the cost of money is so low, it is readily available, and technology is improving costs, making people more efficient and producing new opportunities. I’m optimistic about the rule of law, about our society, and about the cost of money.

He added that “the most unsettled times, which we’re in right now, are the times you get the best opportunities. I have so many more stocks to buy than I have money to invest. It’s unbelievable.”

Years from now, we will look back at the coronavirus and it will be a hiccup, a blip, the answer to a trivia question.

Will you pat yourself on the back for listening to the smart money – or kick yourself for ignoring it?

Good investing,

Alex


About

An expert on momentum investing, value investing and investing based on insider activity, Alex worked as an investment advisor, research analyst and portfolio manager on Wall Street for 16 years. He now runs the wildly successful Oxford Communiqué, ranked as one of the top investment newsletters by Hulbert Digest for more than a decade. He is also the author of four national best-sellers: The Gone Fishin’ Portfolio, The Secret of Shelter Island, Beyond Wealth and An Embarrassment of Riches. He shares his wisdom in his free daily e-letter, Liberty Through Wealth.

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