This is the polar opposite of diversification. Warren buffet would never just massively diversify his portfolio. Neither would i, and we don't want you to either. What we want you to do is buy really good companies when they go on sale. And this little chuck bark right here is telling you think about it as if it's the only one you're going to buy ever. This is a great stment. It pushes the bar very high toward that idea that really you should have to be a great investor. You should really have a check list, oror a whole a punch card of only 20 punches for your entire life.
Why do stock market events cause stocks to go on sale?
Let’s say that cotton prices start to go nuts because of the Arab Spring. Maybe they’re not going to harvest Egyptian cotton crops, so cotton prices go from $1 to $3. The guys who own companies that depend on cotton prices to be low look at the price and say, “Oh no. It’s going to take over a year before cotton prices come down, I need to get out of this company.”
This happens even if there isn’t anything wrong with the company, it’s just going to have a bad year. That company could go from $45 to $15 simply because there are no big buyers. They all get out of the company on momentum. This is what causes stock market prices to change.
So, how do Rule #1 Investors take advantage of stock market events?
Rule #1 investors buy for the long term. They wait, and when they see something that’s on sale because the big guys have sold it off, it takes them just a few seconds to get in there and take advantage of these stock market events.
In this episode of the InvestED podcast, Phil and Danielle discuss stock market events more in-depth, and how to take advantage of when stocks go on sale.
Learn more about buying stocks on sale with the Four Ms Guide! Click here to get started: https://bit.ly/3hRUZs1
Topics discussed in this podcast:
- Stock market events
- How to find stocks on sale
- Uncertainty in the market
- Warren Buffett
- Tesla
Learn more about your ad choices. Visit megaphone.fm/adchoices