When to Buy a Stock: This Market Timing Myth is Costing You a Fortune
The truth is, waiting for the perfect time to buy a stock is a loser’s game.
So many readers reached out to say: “Paul, I was waiting for Tesla’s recent earnings release, thinking I could get shares at a discount and now Tesla’s over $330 a share!”
Folks stayed out, waiting for it to trade lower and now they feel like they’ve missed out.
These two companies have something in common — they lead the market in key growth areas.
When it comes to stocks like these, when you like them and have conviction in the long-game, buy. Don’t wait on the sidelines trying to time your perfect entry point and miss out.
Watch this week’s Market Talk below to find out why it’s a fool’s game to wait “for the right time” to buy into a stock:
U.S. Consumer Insights
First off, as this chart shows the November 7 consumer credit release for September disclosed some revealing information about the U.S. consumer. It showed that consumers pared down credit card debt. For September, Americans carried the smallest credit card balances. U.S. consumer credit rose in September at the slowest pace since mid-2018.
Economists were expecting a total credit card debt rise of $15 billion in September. Get this, it only rose $9.5 billion — far less than forecast. In all, per Bloomberg, it shows Americans are getting their finances in better shape, especially before heading into the upcoming holiday shopping season.
As this next chart shows, on November 5 the ISM non-manufacturing index released its October print. This index represents a key support system for the U.S. economy as it gauges the health of our services industry. This industry makes up about 90% of the U.S. economy. The index showed a rebound in U.S. services industries and an overall improving picture.
In all, it showed economic activity in the non-manufacturing sector grew in October for the 117th consecutive month. It’s because of the robustness of this index U.S. recession fears have not been realized. Economists were expecting a reading of 53.5, but it came in at 54.7. For this index, any reading over 50 represents an expansion. Thirteen non-manufacturing industries represented in the index expanded in October, while only five decreased.
Where the week of November 11 economic releases are concerned, there will be five major releases. On Wednesday, October’s CPI month-over-month number will post at 8:30 am. On Thursday, PPI final demand month-over-month print for October will print at 10 am.
On Friday, we’ll see a trio of releases. October’s retail sales and November Empire Manufacturing will post at 8:30 am while October’s industrial production month-over-month will post at 9:15 am.
Innovation Story of The Week
Get ready for a new industry disruption coming our way. Bloomberg is reporting that a potential major disruptor to the global meat industry is about to make headway — and I’m not talking about plant-based meat products like Beyond Meat that have been making major headlines this year.
I am referring to the cell-based meat industry. Cell-based meat is laboratory-grown meat. This meat is cultivated in a lab by using animal cells versus growing a whole cow or a whole chicken. While this potential trend is still two to three years away, Bloomberg is reporting it could capture 3% of the total global meat market.
Over the longer term, cell-based meat may have legs — no pun intended — because it has the potential to compete directly with muscle cuts like steak and chicken breast. Right now, 25 companies in the U.S. and around the world are working diligently to create cell-based meats.
Even large well-known companies like Tyson and Cargill are showing interest in this burgeoning industry. Bloomberg also reports that in November 2018 the USDA and the FDA agreed to the first step of beginning to regulate the cultured meat industry.
Would you consider adding cell-based or lab-grown meats to your regular diets? We’d love to hear your thoughts on that.
Renaissance IPO index
I’m watching the Renaissance IPO index, which has been under performing the broader markets since late July. The under performance has ceased. It’s on the verge of starting to outperform again, but I’m watching it closely for some confirmation of that.
It seems to be performing along the same plane as some of these other indices now. I’m watching it closely and I think it’s a big indicator for the IPO market and post-IPO market of recently IPO stocks.
This has been a big week for earnings. We had a bunch of names in the portfolio report and I think, for the most part, the numbers were very strong. The market didn’t interpret all the numbers as being strong, so it’s been a mixed bag in terms of trading.
A couple of them are marketplace businesses and we’ve seen them shift their mix and strategy toward larger enterprise customers. They’ve both done it successfully. The old business of small customers they’ve had, they’ve neglected it or they haven’t focused on it enough. The market is focusing on those businesses and I think it’s incorrect to do so.
That’s just what’s happening right now and I think it’s part of the theme where the market is glass half empty still. If there’s four great data points in an earnings release and one that’s not as great, they are going to focus on that one and drive it down. I think the institutions are happy to sit on the sidelines as the lockups expire and the VCs who made investments into these stocks are trying to sell.
I think the institutions on Wall Street are happy to step aside and let the stocks trade down a bit to get better prices. Maybe to stick it to the VCs a little bit who got a little aggressive on the pricing when they went IPO. I think that’s what we’re seeing happening.
As these lockups come off, I think institutions are going to see the value and great underlying numbers and the potential of these companies and step in and start to accumulate aggressively. When they do that, you’re going to start seeing these stocks moving up fast. I’m not saying it’s happening this week, but its going to happen.
I’m watching the IPO index as an indicator for that as well as a few other things
was listening to you and thinking it’s always darkest before dawn. I have gotten a lot of emails recently with people talking about wanting to buy Tesla and they thought the time to do it would be after earnings. Now Tesla is at $350 and the regrets are pouring in.
I feel like it’s going to be the same for some of these signature IPOs like Uber and Slack. We’ve seen a little bit of it with Spotify. I’ve gotten a lot of emails from folks in Profits Unlimited where we have Spotify and it’s also in our STUF portfolio that I’ve told people about on YouTube. People think they can perfectly time it.
These are growing businesses. If they dominate their business like Tesla does or Spotify does, you want to be in it. Go in slowly, start small. That way you can participate in it versus being on the outside looking in.
Now if you are looking into buying Tesla, you don’t know when to get in.
Usually what happens after that is the other money sitting on the sidelines also comes in and follows them. We know from things we’ve all reported to you that the cash on the side in terms of investment accounts is near the highest in eight or 10 years.
There’s an enormous amount of money sitting there that is dedicated for investing and is sitting on the sidelines because of people anticipating a recession, a crash, whatever you want to call it. We, on the other hand, have continued to tell you stay in stocks. We are still positive. The mix of where you want to be has changed a little bit from before.
I am still unbelievably positive. It’s 10 years in and people have been telling me from day one that this market is long in the tooth. There’s been everything from the euro going to collapse, the debt crisis in the United States, Moody’s downgraded us, then there was Brexit, Trump election — there’s always been something.
That’s the nature of bull markets. There’s always something to worry about. The bull market ends when there’s nothing to worry about because everyone is all in. Speaking of bull markets, I want to tell you about my publisher’s push this week: our phenomenal option trading service Rapid Profit Trader that Ian Dyer and I work on together.
This is an incredibly service. It has some incredible gains. I texted Ian right before coming on and he gave these to me personally. STMicroelectronics in 17 days — 68%. 17 days an option trade made 68%. That was sold on October 25. We have an incredible trade lined up to come out on Tuesday.
However, to get that trade you have to get in and subscribe to us by Monday, which is the deadline for Rapid Profit Trader for this subscription. Make sure you click on the strong hands and we’ll send you to the page with all the details to subscribe to Rapid Profit Trader. It will get you that trade that’s coming out on Tuesday.
For more of my thoughts on investing and industry news as it happens, be sure to follow me on Twitter @MampillyGuru.
Editor, Profits Unlimited
I’ve been investing for more than 25 years. I started my career on Wall Street in 1991 as an assistant portfolio manager at Bankers Trust. I quickly advanced to prominent positions at Deutsche Bank and ING, managing multimillion-dollar accounts. In 2006, the owners of a $6 billion firm named Kinetics Asset Management recruited me to manage their hedge fund.