Painful in the short run
I know. No one wants to see their accounts go down. It’s a terrible feeling, I know. I am right in there watching my account go down. Like all market “disasters” this too shall pass. It is especially miserable if you have not been through it before and don’t know what to do, or don’t understand it. What could be worse? Two things could be much worse:
1) Selling great assets based on pricing from the panic of tariffs or any other “crisis du jour” and that panic being pounded down our throats every minute from the media. If you sell, you permanatize your loss, if any. Most of you are far from having overall losses. A stock may be down to $150 from $200 but you bought it at $40 for instance. In that case selling may bring a 20% or more tax rate to pay on the large remaining profits.
The media loves scaring us. They pour out panic porn about the market non-stop. Always have. And, they are always wrong. They don’t understand what companies do. We have this unexpected opportunity to buy shares of the best companies in the world at huge discounts, and participate in the growth of earnings and dividends. You buy a new share for the same price Bezos buys Amazon, or Gates buys Microsoft. And you make similar, no! you make exactly the same return as they do. Just thinking this and knowing this is transformative to creating wealth.
Never forget the great quote by Warren Buffet; “I am fearful when people are greedy and I am greedy when people are fearful.” The world’s greatest investor is worthwhile to learn about. Several great books on him. His annual shareholder meetings transcripts are read by millions.
2.) The second big mistake is to not buy these companies when we are offered the gift of buying them at extremely attractive prices. If you loved it at $100, you should be head over heels with it at $70. This action is crucial in wealth building. You need faith and patience in how capitalism works.
It is a capitalist world, which is the only real solution to raising people out of poverty. Most of the people who don’t own stocks at least those over 50 will never invest. This is a statistic that has been static for a long time, even though 62% of working Americans are in stocks to some extent. So, be successful, gain wealth and give to those, that even after their best efforts, will struggle. Please reconsider the notion that the government has a better idea of where to give your money away. You know, like $16 million in funding for institutional contractors in gender development offices, or $70,000 for the production of a DEI musical in Ireland.
There are dozens of these found by DOGE. The page for tracking DOGE is at https://doge.gov/savings. To date, DOGE has saved us $140 Billion in waste and fraud. That is $859 per tax payer. The numbers are accurate but you will hear they are not from some media outlets. They are adding about 4 billion a day! All the transactions are there for us to look at with receipts.
Kevin O’Leary video. Good explanation of what is happening and why. Worth the time. Also interesting is how set in stone the interviewer’s questions and demeanor are. She is at Yahoo, a leading censor and leftie news outlet. You really can’t believe much from the them. Like PBS with 100% liberl hiring.
The clip below is a good start on understanding tariffs from Kevin O’Leary.
Here is the quick take:
https://youtube.com/shorts/elfGRukhkJ8?si=XeGF5mkiT5Hs-FVa
The longer one below. It is worth the 10 minutes if you want to know more.
Stock prices follow growth of earnings and dividends. That’s it. There is no other way a stock can grow in the long run. We need to quit buying companies with no earnings. That wasn’t even a thing until the tech mania of the Nasdaq in the 90’s. We want to be owners of great American businesses. Hitch yourself to Costco, Microsoft, Meta, Starbucks, Amazon, etc. They have strong management, sales and earnings growth. They are the railroad stocks of the 2020’s and beyond. They are the Coca Cola’s and the Proctor and Gamble’s of today. Owning quality companies can make (will make) you wealthy.
We base that not on wishful thinking, but the idea that great companies go up in value over time. That is like gravity. If that were to change, we would be living in a whole other world, where no assets are valuable. I can’t help you with managing money for Mad Max 4.
The market is worried. Who is “the market?” It’s not us. When the headline reads “Investors panicked over Trump tariffs,” they don’t mean us, i.e., mom and pop investors calling their advisors or selling stocks online. It is the huge institutional money managers who create the sell-offs. We tend to think that people making millions per year are not prone to panic. It is the opposite. They have more at stake and panic more than the average person. Plus they are always “up too close,” meaning they get too many opinions, too much information and too much advice from their peers.
Let’s look at the 2 times that were the worse corrections in my career. The first and biggest by far was Black Monday 1987. The drop over 6 days was 34%! There was nothing but insane panic for weeks. How long did it take to recover from this incredible drop?
Black Monday
2. The Covid Crash-It was huge. An amazing opportunity to buy shares of companies that we will never see again. And the recovery was very fast.
Victor Davis Hansen in 34 seconds explains the problem.
So, if you have the cash and the courage call me as soon as possible. If you are not a client I can set up an account online with you during a call.
Contact me at 208-559-6250 Or- craig@craigverdi.com
Also call if you want to talk about your situation. Never hesistate to call. I would always prefer a call over email. But both are fine.
See you soon,
Craig Verdi
disclaimer: This article is not meant to endorse any security. The names used are simply examples.