I've had a number of people reach out to me and ask, "now that the market is low, what stocks should I buy?"
First, I want to congratulate you for having the correct mindset and understanding that we're going to get through this bear market, just like every other bear market in all of human history. But regardless of any market environment, Corona virus or not, before you make an investment decision you need to have a clear goal and metric of success.
Everybody wants to get better investment performance, save money on taxes, and build wealth efficiently.
Let's pretend that you are able to do that, BUT you still run out of money in retirement at age 70. Your investment plan failed!
Therefore, you need to have a purpose for your investment decisions.
Sooo what if ALL your goals are met and you simply want to get the best returns with an unlimited time horizon, what stocks should you buy?!
The short answer is that nobody know and nobody can pick stocks with any level of certainty and/or consistency to beat the market.
That is the honest truth.
And if we look at the CNBC guru's like Jim Cramer, he's getting absolutely crushed by the market and he's not alone.
There are thousands of mutual fund manger's trying to beat the S&P 500 and almost 90 percent of funds are under-performing the market over 10-15 year periods.
So if mutual funds mangers with virtually unlimited resources can't beat the market, how are you and I going to?
Remember, every time you buy or sell a stock, there is someone on the other end of that trade... have they done more research than you?
Because technology allows us to buy and sell stocks from our phone or computer at anytime, it's easy for us to forget our competition.
It's not a perfect analogy, but buying and selling publicly traded stocks in attempt to beat the market on a consistent basis, is like trying to beat LeBron James one-on-one in basketball. Very few people would take that bet because we can see his talent.
We might think twice before buying a "cheap" stock if we could see the research that has gone into determining why that stock is priced low.
With all that being said, I'm not going to say that growing your "wealth" faster than the market is impossible. For example, I own a small business. Do I think that my business next year is going to grow more than the market? Absolutely!
You can grow your wealth faster than the market, but don't try to do it through the market.
If you have a skill or talent and you're willing to work at it every day, the possibilities are endless!
My Sincere Advice
Focus on what you can control
-How much you SAVE
-How much you SPEND
-Sticking to your PLAN
Use the market as a long term wealth building tool
-Nobody has EVER lost money buying & holding in the market for 20 years
Have an EMERGENCY FUND
-Six Months of living expenses
-Cash is king
Get market returns by
-Investing in low cost INDEX FUNDS
-Investing in globally DIVERSIFIED FUNDS
Use TAX ADVANTAGED accounts
-401(k), 403(b), IRA, HSA, 529 Plans, Stock Purchase Plans, etc