Ten Reasons to Buy Stocks Now and Two Ways to Buy Them
If you’re wondering if it’s time to get into stocks or time to go to the sidelines, you’re not alone.
While millions of new-to-the-market retail traders and investors bought the March dip, millions more went to the sidelines, parking $4.8 trillion in money market funds, more than during the financial crisis.
Now we know retail was right. And we know sidelined investors in money market funds started buying stocks in June, drawing down fund balances by $300 billion at the end of August, and sending markets to new highs.
Then September swept in and shook up everyone.
Now, just as stocks were trying to bounce off their September correction territory lows, in spite of what everyone expects will be a contested election, the President of the United States and his wife get hit by the coronavirus, and stocks are falling again.
So, investors are asking themselves, as they often do, “what now?”
The answer’s simple: start buying.
Here are 10 reasons you should be buying stocks now… and two strategies for buying them.
The Only Way to Go: Up!
The first and foremost reason you should be buying stocks is they have only one place to go, that’s up.
1. There’s more “capital” being created every single day.
Whether its wages, or profits, or from central bank money printing, or helicopter money, or stock market appreciation, or leverage, or wealth creation from selling apps, or companies, or cryptocurrencies, or stuff on eBay, more capital’s being created every single day.
And there are fewer shares available to buy every day.
Between share buybacks, mergers and acquisitions, leveraged buyouts, companies taking themselves private, shares being bought and parked in central bank vaults, in sovereign wealth funds, in buy and hold accounts, in “passive” funds, there are fewer and fewer shares available to buy every day.
The equation’s simple, more money chasing fewer shares equals rising prices. Nothing’s changing that.
2. TINA: There Is No Alternative
With the Federal Reserve promising to keep “rates lower for longer,” meaning bond yields are pitifully low, investors are chasing returns in the stock market because There Is No Alternative.
3. FOMO: Fear Of Missing Out
As stocks keep rising, sidelined investors keep falling further behind. They invariably jump in to rising markets for Fear Of Missing Out. FOMO buying is a momentum driver of markets.
4. Sidelined Money
With trillions of dollars of money sitting on the sidelines, and markets only correcting occasionally before they head higher, sidelined money will be applied to stocks for years to come, because of rising prices, because of more capital being created every day, because of TINA, because of FOMO.
5. Retail to the Rescue
Since the pandemic hit, millions of new “retail” brokerage accounts have been opened by mostly young traders and investors, predominantly millennials and Gen-Zers, whose history of the stock market from 2009 on taught them stocks only go up and to buy every dip, which makes the “stocks only go up” backstory self-fulfilling.
They’re now buying every dip, forcing institutional investors to follow them in, whether they like it or not, because professionals are sitting on a lot of that sidelined money, their clients have FOMO, and they live with TINA every day as portfolio managers.
6. COVID’s Worst is Behind Us
We’re getting better at treating coronavirus patients and keeping more of them out of hospitals. We’re going to get a vaccine, maybe a few. Investors will want to pile into equities as they see the worst of the pandemic getting behind us.
7. A Boost in Stimulus
The country needs more “stimulus” and we’re going to get it. A lot of that “helicopter money” is going to end up in the stock market, which is what spurred new retail traders in the first place.
8. Earnings Beats Are More Likely
Earnings are down and analysts knocked them to the ground. That makes future earnings “beats” more likely, which encourages investors to buy beaten-down stocks and causes “shorts” to cover and drive prices higher.
9. Government Spending No Matter Who’s in the White House
Whoever the next president is, whatever the make-up of Congress is going to be, the country needs infrastructure, environmental, and energy investment, which means spending, which is good for the stock market.
10. Inflation, Thanks to Economic Growth
As economic growth picks up, disrupted supply chains, rising commodity prices, and ongoing trade wars, especially with China, will trigger inflation, which drives investors into financial assets, meaning stocks.
The Two Times to Buy
1. Buy the Dips
Whether you look back to 2009, like the millennials and Gen-Zers do, or you look a lot further back, there’s one thing that proves itself as a winning stock strategy, over and over, and over again: buy the dips. This time is no different. In fact, time, is the only thing that differs, meaning how long it takes for down-cycle markets to turn around.
What we see lately, meaning over the past 11 years, is the time it takes markets to recover from selloffs, dips, corrections, even crashes, is shorter and shorter. Re-read reasons 1-5 to understand how and why.
There’s one comfortable way to buy dips. While it may not be the absolute best way, it is the smartest way. Whatever capital you want to apply to any stock, stocks, to the market, on the first sign of a 10% dip apply between 20% -25% of your capital to each position you’re buying.
Add another 20%-25% on every further 5%-10% dip. That way you’re buying more shares on the way down, “averaging down,” as you try and buy close to the bottom. That’s where you’ll want to be when markets bounce.
2. Buy on the Way Up.
Some investors only buy stocks that go up, and that’s a great strategy. I buy dips and I buy on the way up. Buying stocks in a rising market, maybe because you missed the dip, or didn’t get to apply all the capital you wanted because the dips weren’t that deep, is going to make you a lot of money. That’s because stocks have only one way to go, and that’s up. Buying stocks as they trend higher is just as rewarding as buying dips
Now, when it comes to trading, it can sometimes be trickier in markets like this.. There seems to always be a way to go “lower,” and supports can give out at the drop of the hat – or a market-moving tweet.
If it feels like you’re flying blind, I encourage you to check out Tom Gentile’s newest software. He’s installed a “wall of money” right into his office – one that monitors every trade, on every stock, on every market in the world, in real time.
He’s using his “wall of money” to pinpoint a $68 trillion volume explosion. And he created a unique algorithm that can help you skim off the top. He’ll tell you exactly when to buy and sell, so you won’t have to worry about dips, peaks, or anything in between.
Tom’s letting me release this special video where he explains everything – but it will only be available until Sunday night. After that, your opportunity to access Tom’s “wall of money” will be gone.
I’m urging you not to wait, because you could potentially miss out on thousands of dollars in winning trade recommendations. Click here for more details.
Now, you don’t have an excuse. You’ve got reasons and a roadmap.
The stock market’s a great game, you’ve just got to be in it to win it.
Go get ’em!