Start Loving Some Stocks

I won’t be writing much on my free site this week, so I’ll leave you with a recap of my recent writings.

The market has been making a bottom of sorts. It’s too soon to say whether it’s the final low before a massive recovery, or an intermediate-term low that’ll hold for a few months. Either way, this is a time for building positions, adding money to the market, setting yourself up to benefit from higher prices to come.

The Kelly Letter made seven stock purchases and added money to its permanent portfolios in the first quarter. It did so at the low in January and the test of that low in March, both times to howling ridicule from commentators. We sport a thick skin for such criticism and, in fact, see it as confirmation that we’re doing the right thing. It looks to be the case this time, too, though it’s a little early to say.

Keep this in mind: you should get more aggressive with your buying as the market moves lower, not more aggressive with your selling. Makes sense, right? Yet, most people reverse the order and sell as the market moves lower and buy as it nears its apex.

Cases in point:

  • Everybody loved Advanced Micro Devices at $40 two years ago, and hates it today at $6.
  • Everybody loved Dell at $40 three years ago, and hates it today at $20.
  • Everybody loved Starbucks at $40 two years ago, and hates it today at $18.

To paraphrase Warren Buffett, hate when others love and love when others hate. It’s a hateful crowd these days, so start loving some stocks.

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