Omicron: Classic Case of Sell First, Think Later
“Mr. and Mrs. Mizrahi, Charles can do better.”
As a kid, I dreaded parent-teacher conference night. My teachers’ reports to my parents were always the same…
“Charles asks too many questions and needs to focus more on classwork. He can do better.”
When they got home, my parents would read the Riot Act to me.
It turns out I couldn’t help my focus at the time. They missed the boat on that.
Back in the 1970s, attention deficit disorder went undiagnosed. So, I’ll give them a pass there.
But too many questions? You gotta be kidding me!
I guess in a class of 30 students, too many questions from one student can be a drag. But how else can you learn if you don’t ask questions?
Even from an early age, I never accepted anything as fact or came to a conclusion until I drilled down and totally understood it. This really annoyed my teachers.
One teacher even called me an “independent thinker” … like it was a bad thing!
Yet these “bad” traits have served me well as an investor and kept me from losing money.
They help me avoid overreacting to headlines or falling into the groupthink behind knee-jerk market reactions — like the one we saw last week…
Traders Make a 180
This Black Friday not only had below-average shopper turnouts. It also saw the biggest one-day drops of the year for the stock market.
The major indexes tumbled over 2% after scientists in South Africa identified a new COVID-19 variant. The fear is that it could be more contagious and resistant to current vaccines.
Source: The Wall Street Journal
And here’s what The Wall Street Journal said on the front page about the drop on Friday…
Investors feared the strain could set back months of efforts to revive the world economy and save lives.
But guess what the news is saying today?
From this morning’s WSJ:
Oil prices and U.S. stock futures gained, recouping some losses from Friday’s selloff, with investors betting that the impact of the Omicron Covid-19 variant will be less profound than initially feared.
And further down in the same article…
Investors are awaiting more clarity on the likely transmissibility and severity of the Omicron variant and whether it will weigh on the efficacy of vaccines.
Are these the same “investors” from Friday? It’s nearly a 180 from what was being said just a few days ago!
This is a classic case of “sell first, think later.”
The impact of COVID-19 on the economy and the way we live is no secret. We’ve been adapting to the virus for close to two years now.
And we’ll continue to adapt. Scientists are continuing to look into the new variant and vaccine makers are already looking for ways to address it.
So, unless you want to give yourself an ulcer, focusing on the day-to-day stuff won’t help.
In the long run, scary headlines and knee-jerk reactions to more pandemic news will just be a blip on the radar.
The Real Talk is that we own pieces of real businesses, not blips on a computer screen.
So, the next time the markets drop on some short-term news, I want you to think about the companies in your portfolio.
If their businesses or the reasons for buying them haven’t significantly changed, then you don’t need to panic or worry. I got your back on that. If something changes, I’ll let you know.
In fact, while most traders are hiding under their chairs, you should use pullbacks like this as a buying opportunity.
Right now, I’m recommending that my Alpha Investor subscribers pick up more shares of three stocks already in our portfolio. The recent market drop has made them even better buys today than when I first recommended them.
Mr. Market is giving you a wonderful opportunity right now. What are you waiting for? You can click here to get a subscription to Alpha Investor.
And I want to hear from you! How are you keeping a level head during the day-to-day swings? Or which companies are you keeping on your short list to buy on pullbacks?
Let me know by sending me an email at RealTalk@BanyanHill.com.
Founder, Alpha Investor