It has been a while since I wrote a stock blog but this isn’t really a stock blog. This is kind of like a wealth blog. This is because what I am going to talk to you about speaks to value investing and contrarian investing, which allows for people to buy low and sell high, successfully. This isn’t a stock blog because this strategy works EVERYWHERE. This strategy works in stocks, real estate, business and maybe even crypto-bypto.
The inspiration from this blog came from a question I got about Disney stock. If you have been watching lately, Disney has been getting hammered in the press. People talk about how ESPN, owned by Disney, is doing poorly and being beat out by competitors like Bleacher Report. People talk about all kinds of things which beat the stock down. The outlook on Disney just hasn’t been that great. During this whole time I couldn’t understand how a company that puts out a quality product and makes money hand over fist could be struggling. I saw value where others saw a company that was past it’s prime.
The same is true for Twitter. Twitter has been getting hammered over the last few years. They had a hard time making money and compared to Facebook and other companies they just weren’t really viable as a marketing vehicle and if they aren’t viable then they aren’t attractive .
If you look now, both stocks are booming. Disney just bought Fox, and Twitter has been having more success lately, the stock is up 39% year to date. If you had balls enough to buy and keep buying down, you were greatly rewarded. Instead of investing in hope and chasing returns, invest where there is doom and gloom, get a bargain, and when it comes back you will look like a genius. If they aren’t laughing at you, you aren’t doing anything worth doing.
Buy the bad
This right here is a super success hack folks. I shouldn’t give it out for free. Buy bad news. Buy it hard. Load up on it for the low and then when people turn around and start singing their praises you will be rewarded for your boldness. I have seen this happen too many times. The great thing about investing is that passive investing is one thing but I think we give passive investors too much credit. Activist investors not only invest but they put effort and energy into what they invest in. Similar to what I do with Under Armour.
Investing passively is great if you are lazy but you get a better return when you invest and promote what you invest in so it can be turned around quicker. Don’t believe me? Ask Icahn and Buffet. They don’t just buy stock they turn companies around. They turn companies that were getting beat down around by buying the bad for a discount and then reshaping their future, in turn they are greatly rewarded.
Bad news looks like reports of scandals, reports of operations issues, reports of poor earnings and outlooks. You have to remember that the people running these companies are highly educated and skills. They get paid well because they have the skills, connections and education to help them turn bad into good. Get them working on your behalf.
Sell the good
The only thing worse than selling low is buying high. Today when Disney released that they were buying Fox someone asked me if now was the time to buy Disney. NOOOOOOOO, I responded, in the Ghost from Power voice. The time to buy is before the news. The time to sell is when its hot.
This was super clear to me when I got news that Litecoin had doubled in price over night. I was like well, now is the time to get into crypto-bypto. I fired up the coinbase app, loaded in my financial information and proceeded to try and get in on the litecoin action. The problem is that from there Litcoin dropped 20% and then it ended the day at a 50% gain which for those that go in at the top is a 50% loss. You don’t hear people bragging about their crypo losses on the internet, but they occur. I was lucky that the ID system failed and I didn’t lose half my money gambling on the crypto stuff.
I abandoned what I knew because I though crypto was different. It is irrational, it gets pumped by hype, but the principal of buying the bad and selling the good trumps all. Instead of buying at the top, you should be avoiding or selling.
Sell the good, take your profits and funnel it into some more bad news
I like this concept because it’s not price or stock or asset driven it’s based on the irrationality of the media and how they love to promote doom and gloom. The world isn’t going anywhere. Under Armour isn’t going anywhere, great companies like Chipotle and Disney aren’t going anywhere so chase them down and load up on cheap stocks WHILE they are cheap. That’s how you win. Join our investment club TODAY by emailing firstname.lastname@example.org
Be great, invest well,