A great company took a hit after reporting earnings. What should I do?

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The name of the game when trading stocks is buy low and sell high.  Duh.  But this is often easier said that done.  Most of the time when people see a stock falling they sell and they definitely aren’t in a hurry to buy more.  From years of experience I have found that buying when the stock is falling is exactly what you should do.

In order to buy low you have to be willing to buy when its ugly.  You have to be willing to buy when bad press is beating a stock down and you don’t know when the bottom is going to appear.  This, at least, is how I have found the greatest success in trading.  This is especially true when a great company is getting trashed.  

Recently we have seen solid companies like Google aka Alphabet and Starbucks get smashed by earnings.  Even though they are strong and great companies that employ tons of people.  They missed estimates and therefore are taking a beating the day after, falling 5-7%.  In my experience this is a great time to buy.

If a company has large revenue numbers, a great balance sheet and an amazing well known brand this is a company you want to own.  Because the market can sometimes get emotional its important to recognize that when these emotional dips occur you need to scoop up shares. The opposite is also true, when the market is rallying you need to be taking some profit off the table not buying more.

In order to be a good investor you have to be a contrarian.  You have to buy when others are selling and sell when others are buying.  In the words of Warren Buffet “be fearful when others are greedy and greedy when others are fearful”.  This means that when you see people selling off shares and allowing for a pullback in the stock you need to buy and buy it hard.  Every dip is a potential profit your you.  If you are interested in working with our club and buying the dips please email info@capitaltodd.com we would love to have you!

Be great!

Todd Millionaire

 

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