As the "Correction" Arrives, Here's What We're Thinking
We're seeking new "Model Portfolio" stocks — at bargain prices ...
A few weeks back, I wrote about the gathering fears (and gathering storm clouds) of a pullback — and detailed the “right way” to handle any stumble in stock prices.
I followed that up (and kept a promise) by delivering a “five pullback stock candidates” report.
It was fortuitous timing for both, I grant you. But we “do the work” here at Stock Picker’s Corner (SPC). And I was honest enough to refrain from predicting “when” that would happen … or “how bad” it would be.
But I shared all of that because I saw:
🚨A bull market that was growing long of tooth.
🚨A consumer that was sliding deep into debt.
🚨And a continued “sleight-of-hand” monologue from our leaders in Washington … a “monotone monologue” that focuses on decelerating inflation rates, but ignores “cumulative prices” that are still 20% to 30% higher than four years ago — and wages that haven’t kept pace.
Since penning that report and spotlighting those issues, we’ve seen some of the things I was worried about come home to roost, including:
Several ugly market days last week – thanks to earnings misses, a dividend elimination by Intel Corp. INTC 0.00%↑, and a jobs report Friday that fell way short of expectations.
A tech-focused Nasdaq Composite Index that actually dropped into “correction” territory Friday.
And economic slowdown fears so significant that “seers” from both Citigroup Inc. C 0.00%↑ and JPMorgan Chase & Co. JPM 0.00%↑ say they see two half-point rate cuts by New Year’s Eve.
At SPC, we keep our eyes open — since you never know where you’ll find new warning points, big opportunities — or both.
One example: I was on a college visit with my son Joey recently — and he told me he wanted to attend the seminar for that university’s business school. During that presentation, one of the school’s placement officers recounted how job offers to graduates were being “delayed.”
First I’d heard of that this time around. But it’s straight from the front lines. And it certainly factors in …
Here’s where it gets interesting for a Contrarian Investor like me.
Gloom kinda makes me glad. At inflection points, at least. Because those inflection points create dislocation — which creates bargain opportunities.
As our “pullback” stories showed you folks, we’re hunting for those bargains and are actively looking at several new companies to add to the SPC Premium Model Portfolio.
But we’re also being methodical and meticulous about our work. And we’re mindful of you folks.
And while you’ll often hear me say that “I don’t care” what the market does from day to day (which is the truth, by the way), I’m also looking for opportunities that will build real wealth long term.
Here’s what I’m looking at ….
The “Wealth Bullseye”
Winning stock picking is a lot like firing an old-school Colt Peacemaker .45 — which my Dad and I built a model of when I was a kid.
Folks also called it a “six-shooter” … because it holds six shots.
Six bullets.
And once you pull that pistol from its holster, you can fire it in a bunch of ways.
You can point the barrel … and just keep pulling the trigger … until the chamber is empty and you’re out of ammo — hoping you hit something … and hoping none of those bullets went astray.
Or you can draw down on your target, take careful aim … and squeeze off shots one at a time.
Lots of folks see themselves as a stock-market version of the Clint Eastwood character Josey Wales (“Are you gonna pull those pistols, or whistle Dixie?”).
But as impatient investors or “traders,” most of those folks also lack that cinema outlaw/gunfighter’s incredible skill set.
In fact, statistics prove that most can’t consistently hit winners … even with an anti-tank gun.
Those folks are Wealth Killers.
As Wealth Builders, we’re not in a gunfight.
Not when stocks are running … and not when stocks are selling off.
Our Version of the Right Stuff
Thanks to the SPC approach - to hold investments for three, five, seven years or more (depending on the situation) – our stocks don’t fire back.
Because of that long time frame – and our “Accumulate” strategy, which has us add to positions we like on pullbacks – we’re operating at low speed to build high returns.
That means if there’s any shrapnel … or any ricochets … accumulating and reducing our average cost basis, we’re giving ourselves plenty of time to stroll leisurely out of harm’s way.
Instead of a gunfight, we’re taking target practice. Our goal is to hit that bullseye … over and over again. There’s no reason to rush … nothing that keeps us from taking careful aim … or from taking our time.
We take great care of where we’re placing our aim. And we do that by finding the best storylines and then drilling down to find the biggest beneficiaries.
Our goal: To put time on our side and find stocks that can draw enough power from those narratives to double your money … or more.
But even with a long horizon and the “Accumulate” mindset, I also embrace a Warren Buffett-esque approach that has us “buy the right kind of business at the right price with the right people” – so that everyone in the SPC community does well over time.
Since I’ve just explained my take on “right businesses” and “right price,” let me explain (for me) who those “right people” include:
My “Platinum Rolodex” contacts like Silver Stock Investor Peter Krauth, former Wall Street analyst and current Coal Trader steward Matt Warder, venture capitalist and Net Worth Club helmsman Danny Brody … and more.
And, most important of all, you folks … our readers.
That “right business at the right price” mindset adds to the value we bring you.
And so does the Model Portfolio we’ve assembled — which we still really like.
Indeed, none of our views on any of those stocks have changed. Those that have pulled back, we continue to see as accumulate plays — which was our plan from the get-go.
But it’s a “work in progress,” since there are still other companies for Wealth Builders we’ll be adding to the Model Portfolio and investable opportunities we’ll keep sharing with all of our readers.
But with markets having been rocky, I just wanted to touch base.
We’ll take our time.
We’ll do the work.
This pullback could give us some of those “right businesses at those right prices” — a great setup for “going long.”
No matter what plays out, we’ll stay focused on being Wealth Builders.
And SPC is here for you.
See you next time …