Right now, the stock market is off to one of its top five worst starts ever.
The first few weeks of the year, this weak start was due to inflation and higher gas prices.
Now the reason for the downturn is the Russian invasion of Ukraine.
Stocks are taking it on the chin.
And if you’re focusing on the stock prices heading lower, you’d easily be worried. Losses of 40% or more can keep you up at night.
But as for me, I sleep soundly. Here’s why…
Good Night’s Sleep
There will always be a reason to stuff your money under a mattress.
But as legendary investor Peter Lynch said, you shouldn’t sell just “because the sky is falling.”
And that’s why I don’t focus on the stock price. I don’t sell based on emotion or fear.
Instead, I focus on the business.
The reason is simple: The stock price tells you nothing about the business.
The stock price just records the latest transaction between a buyer and seller.
But why should I let an emotional seller who’s dumping their shares tell me the worth of a business?
Sounds silly, right?
Here’s the Real Talk: It’s the dog that wags his tail, not the tail that wags the dog…
Deep Discounts
Making money in stocks investing is simple.
Stock prices always follow the worth of the business, not the other way around.
So, I let the business numbers — revenue, earnings, free cash flow and the like — tell me about the business.
Because once you can identify quality businesses, all you have to do is buy them when the stock price is trading significantly lower than the underlying worth of the business.
I like to say it’s like buying dollar bills for $0.50. Nothing more complicated than that.
You don’t need to know or follow the tick-by-tick change of the stock price.
In fact, when stock prices head lower, I take out my shopping list…
In the Cart
There’s nothing I like better than a bargain. One of my favorite pastimes is going shopping at Costco.
And right now, Mr. Market is marking down the stock prices of outstanding businesses.
I’m seeing that in one industry that I’m very bullish on: semiconductors.
The demand for semiconductor chips continues to increase. Heck, they’re in everything.
But the supply of chips can’t keep up with demand…
For example, the other day, I read that Ford is selling cars that are missing chips, as long as they aren’t safety related.
This is setting up the perfect storm for chip companies…
Checkout Line
As I told Alpha Investors in February: If I could, I would pack our portfolios with chip companies.
And thanks to fear-driven investors, Mr. Market is finally offering outstanding bargains in this industry.
In fact, we have several companies in the portfolio that’ll benefit from the semiconductor industry’s tailwinds.
Two of them are still trading below their buy-up-to prices today, making them a great bargain.
Alpha Investors who are new to the service or underinvested should take advantage of this to add to their positions.
If you’re not an Alpha Investor yet, it’s not too late to get in on these opportunities!
You can find out how to join us right here to access these two recommendations before they no longer trade at bargain prices.
Regards,
Founder, Alpha Investor