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Expert Advises: You Should Be Buying During a Market Crash

Story Highlights:
  • In the market Thursday, the only thing that seemed to be rising was fear.
  • But one expert argues: This was a buying opportunity.
  • Three rules teach you how to find the best businesses to buy during a downturn.
Expert Advises: You Should Be Buying During a Market Crash

Were you buying stocks this week?

In case you missed it, the markets tanked.

The major indexes had plunged by the time the closing bell on Thursday:

Index Thursday Performance
S&P 500 Index -5.89%
Nasdaq -5.27%
Dow Jones Industrial Average -6.9%

It was the first time in a month that the market experienced losses for three days in a row.

The only thing that seemed to be on the rise was fear. You can see it in the chart of the CBOE Volatility Index (VIX) below:

Chart showing that the volatility index surged 38% on Thursday, June 11.

Traders call it the Fear Index because it measures how much people are willing to pay for protection in the options market. The more they’re willing to pay, the more concerned they are for their portfolios.

As I watched my portfolio fall, I realized some of you might have done the same.

And while the market walked back some of those losses by the end of the trading day on Friday, it’s worth looking at what happened on Thursday.

Now, a couple of things are obvious:

  • A surge in new coronavirus cases in many states has led to fear of a second wave of the deadly virus.
  • The Federal Reserve forecast high unemployment numbers into next year.

But I still wasn’t sure what to make of it.

So I reached out to one of our experts to get his take on what happened Thursday — and where we should go from here.

Why You Should Buy on Market Downturns

Former hedge fund manager Charles Mizrahi told me I should have been buying on Thursday.

Here’s what he said:

If you are an investor, Thursday’s price action doesn’t mean squat. Who cares? 

The only ones who need to worry about market downturns are those who trade on margin or invest money they need in the short term.

Otherwise, downturns are great times to buy stocks at bargain prices.

Over the short term, stock market fluctuations are nothing more than noise.

No one can accurately predict short term stock price movements, consistently over time.

Instead, it’s much easier to focus on buying financially sound businesses at bargain prices.

Forbes magazine’s list of the 400 richest Americans — the Forbes 400 — is filled with investors who made the list using this approach.

I don’t see too many short-term traders on the list.

If you worry about every wiggle and jiggle every day, you shouldn’t be a stock investor. 

[Warren Buffett’s business partner] Charlie Munger put it best in a 2009 BBC interview:

“In fact, you can argue that if you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder, and you deserve the mediocre result you’re going to get compared to the people who do have the temperament, who can be more philosophical about these market fluctuations.”

Now, the key to Charles’ advice is to buy financially sound businesses at bargain prices.

But you might be wondering: “How can I choose which stocks will actually go up?”

The U.S. indexes alone hold thousands of stocks. Many are overpriced. Some will go bankrupt during this recession.

Charles has three rules that he follows before investing in any stock.

And speaking of bargain prices … You can find out what the rules are, as well as get access to a whole host of special reports, and Charles’ top stock picks — for a whole year, for less than the cost of a cup of coffee each month!

Within 30 minutes, you could be taking aim at stocks positioned to soar as high as 308%, 573% and even 647%. Click here to learn more about Charles’ three rules.

And we want to hear from you! Were you buying stocks on Thursday during the market rout? Which ones? You can reach us anytime at winninginvestor@banyanhill.com.

Finally, we have more great content to share with you.

Check out Our 3 YouTube Videos!

Charles Mizrahi’s six-minute video, “Buy Today: The Only Industry Guaranteed to Go up in the Next 5 Years.”

Apex Profit Alert Editor John Ross’ new 15-minute Reading Tea Leaves video, “Investing Tip: Weigh This Before Buying Into Leveraged ETFs.”

And Real Wealth Strategist Matt Badiali’s five-minute Marijuana Market Update, “Canopy Growth Stock Stumbles but Doesn’t Fall.”

On Monday, Matt Badiali will reach out to tell you about electric vehicles and batteries.

Stay tuned!

Good investing,

Kristen Barrett

Kristen Barrett

Senior Managing Editor, Winning Investor Daily

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