The “animal spirits” are back.
This is Wall Street’s term for market movements that aren’t based on news or in-depth analysis. Right now, investors are selling because other investors are selling.
As I write this, the market has fallen from last week, even after spiking yesterday. The market’s “fear gauge,” the Volatility Index, spiked 17% on Tuesday alone.
But investors aren’t making decisions based on research or changes in companies’ financials. They’re doing it because they see the market moving and don’t want to be left behind.
This kind of noise can easily scare even intelligent investors out of the market. But that’s why we’ve kept you prepared…
We say it all the time: We’re investors, not speculators. We’re looking at the bigger picture. Even if a stock falls a bit after we buy, we aren’t fazed — because we know we’re holding for the months and years ahead.
So, short-term moves like this don’t bother us. In fact, market drops can be exciting. Because we get to buy more of our favorite companies at bargain prices.
And several of our favorite trends are trading at a discount and giving you another chance to get in today…
The Strongest Tech Companies Are Still Buys
Technology companies have been on a tear for the past few years. And although another bubble might be on the horizon, Wall Street veteran Charles Mizrahi sees a huge difference in some of the tech companies of 2000 and the ones of today…
Here’s what he said back in January: “This time around, many tech companies are generating huge amounts of free cash flow, record earnings and revenue. Companies with rock-solid balance sheets run by rock-star CEOs with strong industry tailwinds will continue to do well.”
So, while some tech companies could crash, the strongest will keep surviving and thriving. Just take a look at the massive semiconductor chip shortage across the globe. Tech is simply too essential for our daily lives.
It’s embedded in every industry these days, including things like health care and finance. And we want to be invested:
- Vanguard Information Technology Index ETF (NYSE: VGT): This exchange-traded fund (ETF) will likely benefit as the semiconductor shortage works itself out. Make no mistake, production of these chips is essential to modern industry. As companies are able to ramp up supply, they stand to make a lot of money.
- Global Robotics and Automation Index ETF (NYSE: ROBO): We’ve been excited about artificial intelligence (AI) for a while. Manufacturing, transportation and health care will be revolutionized with AI. And we believe AI will be as massive a trend as electricity or the internet before it. But it’s still in its infancy, so early investors could make outsized gains over the next few years. And ROBO holds the top companies in the space.
- Global X FinTech ETF (Nasdaq: FINX): Fintech is another growing trend. It’s set to transform the world of finance. We’re talking about companies using tech advancements to bring more efficient and personalized finance services to customers — cutting out big banks in the process. COVID-19 has already accelerated these companies’ moves. And they’re only going to grow from here.
Invest in the Recovery
Of course, we can’t ignore the pandemic’s effect on the stock market and public companies. As the world reopens, we expect that some of our “new” habits will be here to stay.
Many people put their stimulus payments into the stock market. We can likely expect that money to keep working for them over the next few years. And the companies with clear tailwinds and great CEOs will benefit:
- Vanguard Financials ETF (NYSE: VFH): The market is the greatest wealth creator in history. And many investors have gotten a crash course during stay-at-home orders. In March 2020, the market had a 30% fall to start the pandemic. Since then, many of the major indexes have made new highs. Now, they’ve all pulled back over the past few days, but that won’t last forever. Smart investors will jump at the chance to invest in the marketmakers through this fund.
- Global X Founder-Run Companies ETF (NYSE: BOSS): We often say that companies with stellar CEOs with proven track records are going to do better than any others. This fund holds some of the best founder-run companies at the top of their industries — including Square, Nvidia and FedEx.
We know buying into a dip can be scary.
But as Charles often says, if you want to be a great investor, you have to have courage. You need to be greedy when others are fearful.
And there’s fear in the market today. So, you should take this opportunity to add to these trends in your portfolios.
Managing Editor, American Investor Today
P.S. We focus mostly on long-term investing here in American Investor Today. But with the right approach, it’s possible to make outsized gains in the short term, too — sometimes over just a few days or weeks in a market like this.
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