Don’t Get Too Clever With This Market
“I think you’re being penny wise and pound foolish.”
That’s what Bill told our multi-millionaire client as we sat at our office conference table.
I almost spit out my coffee!
Our client was a successful businessman and had amassed a tidy fortune from his practice.
And yet Bill — my boss and mentor at the hedge fund — was essentially calling this successful and wealthy professional a fool!
Bill was never one to mince words. If you asked him a question, he would give you a straight answer. Even if it wasn’t pleasant or politically correct.
In this case, our client was considering using some of his wealth for a trading strategy that was popular with “cutting edge” hedge funds. But it was also very risky.
By being blunt with our client, Bill probably saved him tens of thousands of dollars. May hundreds of thousands!
I’m reminded of this conversation with Bill today, because several of my friends and colleagues have been asking me about similar investments that simply carry too much risk.
Let’s make sure you don’t make the same mistake…
The “Clever” Question He Shouldn’t be Asking
My brother texted me this week to ask when he should start buying some airline stocks.
Other friends and neighbors have asked me about buying cruise ship stocks or shares in the beaten down oil and gas space.
I’m no longer licensed to give individual investment advice. So I can’t direct them personally on which stocks to buy and which ones to avoid.
But I can’t help but think of Bill’s “penny wise and pound foolish” statement.
In today’s market, you don’t have to be “clever” and buy the stocks that have been trading sharply lower.
In many cases, these stocks have remained lower for a reason!
And why would you buy a risky stock in a challenged industry when there are so many great places to invest for your retirement?
Airline stocks are a risky bet right now.
We simply don’t know how long it will take for passengers to start flying again. And at the same time, airlines will need to make some costly changes to keep passengers safe and healthy.
Even with much lower stock prices, I’m not sure that these companies are “bargains” for investors right now.
The same goes for other parts of the travel and leisure industry.
Hotels may have higher costs in the future. And we don’t know when people will start booking rooms again. Cruise ships will have to offer steep discounts to get customers interested.
And the oil and gas industry?
We literally don’t have enough storage space to put all the oil being produced… And it doesn’t look like the supply / demand imbalance is going to change any time soon.
There are too many unanswered questions for me to feel comfortable putting more money into these areas of the market.
So while I understand the temptation to buy these stocks for steep discounts, the concept is still too “clever.”
Especially when you look at the alternatives.
There are Simply Too Many GREAT Areas to Invest
Why would you “bottom fish” and buy companies that have obvious problems, when there are so many great investments that you can make right now.
Yesterday, our Head of Research, Jonathan Rodriguez shared a great video with us highlighting the healthcare sector and four champion stocks that can protect and grow your wealth.
Best of all, the companies he mentioned pay you a generous dividend, helping you secure a steady stream of income to cover day-to-day retirement expenses!
Gold prices are surging higher thanks to the trillions of dollars the government is throwing at this economic crisis.
Investing in precious metals — or in the miners that produce them — is a great way of protecting the true value of your retirement, and profiting from the natural consequences of all of this “funny money” being printed.
And of course, we’ve been pounding the table on 5G opportunities.
Because now more than ever, our nation needs fast and reliable internet connectivity.
- For business calls and sharing data…
- For checking in on our loved ones…
- For medical tech that will save lives…
- For tracking and modernizing food delivery…
- For many many other areas of our daily lives…
5G is a tech revolution that has only been accelerated by the COVID-19 crisis. And there are so many great companies we can invest in that are at the cutting edge of this revolution.
So again I ask, why would you invest in risky beaten down areas of the market when there are so many great investments you can make that are already giving you a profit.
It’s only natural to see some stock prices at mere fractions of where they once traded, and think it’s a good idea to buy them. I don’t fault you if you’re tempted…
But today I want to encourage you to take a page out of my mentor Bill’s playbook.
Buy more of the things that are actually working today.
And don’t be “pound foolish” by trying to buy the cheap stocks of companies that have serious problems right now.
Following Bill’s blunt advice will save you thousands, and leave you with much more income for a fulfilling retirement.
Here’s to growing and protecting your wealth!
Editor, The Daily Edge