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What Facebook’s $232 Billion Wipeout Means for You

What Facebook’s $232 Billion Wipeout Means for You

Last week, Facebook’s parent company, Meta, broke a record.

But not the kind of record that made shareholders smile.

The company said it would likely see ad revenue decline in the near future.

And its stock dropped more than 30%, wiping out a record $232 billion in value in one day!

On the other hand, fellow social media company Snap reported its first quarterly profit. And its stock price soared close to 60%.

And they weren’t the only tech giants that Mr. Market was caught flat-footed on. Amazon, Google and Netflix all saw big price swings, too.

These billion- and trillion-dollar companies were trading as if they were penny stocks — moving by huge percentages in both directions.

And this tweet sums it up perfectly

Charlie Bilello big tech stock market earnings tweet

And this is how I can tell Mr. Market is getting it wrong. Because the worth of a business doesn’t fluctuate on a daily basis by 60% or even 20%…

Take a Seat

Only in the stock market does one see such huge changes in asset value on a moment-by-moment basis.

You rarely see the same thing happen in other asset classes such as real estate, farmland or artwork. For example, there’s no price ticker on my house, yet I have a pretty good idea what it’s worth.

In the same way, I don’t need a price ticker to tell me the worth of a business. That’s why I focus on valuing the business instead of following the stock price.

So, my simple advice to you is to ignore these crazy gyrations right now.

Many investors feel the need to act and react because price data is recorded moment by moment.

But this kind of short-term thinking is hazardous to your wealth. Stock prices should serve you, not guide you…

Silver Platter

Wall Street focuses on the next quarter, but we focus on the next several years. And that’s our edge.

As Warren Buffett once said: “The stock market is a device to transfer money from the impatient to the patient.”

So, if you know the value of a business, you can then use Mr. Market’s wild swings to buy shares at a bargain (or sell them at a rich premium).

That’s how you make money in the stock market.

In fact, now’s a great time for Alpha Investors to pick up shares of stocks in our model portfolio. Several of them are trading at bargains, below their buy-up-to prices.

This includes my newest recommendation — a 21st century leading company that’s paving the way for the technology revolution. If you haven’t already, check it out in the latest Alpha Investor monthly issue right here.

And if you’re not a part of the Alpha Investor family yet, you’re always welcome to join us! You can click here to find out all the details.

Regards,
Charles Mizrahi

Charles Mizrahi

Founder, Alpha Investor

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