"When should I buy?"
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I don’t buy into Trump’s BS on tariffs. Trump is waging a trade war with just about everyone else across the world. The European Union, China and even Canada have said they want to fight the new tariffs. Then there are others like Mexico who don’t want that trade war. To me, Trump is playing a game of chicken – just waiting to see who blinks first. Yet the market is taking him seriously. I don't buy this. Like I’ve said in my previous email, Trump’s tariffs are very haphazard – and confusing. Sure, stocks have fallen over the past week – tech, healthcare, retail, food sectors have been crushed. Bond yields have fallen, bond prices gone up. And investors are seeking “flight to safety” in bonds. I can’t control how Mr. Market behaves. I can’t control what policymakers will do. But I can control my mindset. And the way to slash through this jungle of chaos is with confidence and momentum. I've read this on the internet that changed the way I invest: In the jungle,
The biggest animal is the elephant The fastest animal is the cheetah The tallest animal is the giraffe And the wisest is the fox The lion may not be the fastest, the biggest, the tallest or the wisest. The lion is not any of that. Yet it’s king of the jungle. Why? Because of its mentality. The lion carries confidence and a deathless courage. That’s how I would approach the stock market today, especially when markets all doom and gloom. I’m clear on one thing: This trade war won’t last. But I also know these tariffs are far from over. And that’s the good news. This is not the time to panic and sellInstead, a Diligence member, Charles, asked me… “Willie, when should I buy?” Thank you for your question In such times of market fear... I always recommend having a Right Price Limit. This is my sensible price I’d pay for a stock after assessing its intrinsic value.
For instance, my Right Price Limit for Alphabet is $150 in my Diligence Stock Watchlist. Now that shares fall to $145, I buy. I'll accumulate more as prices drop by another 10-15%. Of course, I only use my Right Price Limit if I'm buying into a high-quality business with predictable profits, and a durable economic moat. Alphabet controls at least 66% of the search engine market. Its YouTube dominate video with >>800 million monthly active users. What's more, growing profits and ability to raise advertising fees protect Alphabet from potential inflation from tariffs. This reflects pricing power. As long as Alphabet drops below my Right Price Limit, I'm not overpaying. So... Having a Right Price Limit takes away the emotional fear. Second, you don’t chase for the lowest price -- No one knows exactly where the bottom is. You control your risk. You control your emotions. Don’t be scared. Mountains are imperfect. There’s going to be fault lines, cracks and gaps along the way. But that only pushes the biggest, mightiest mountains higher. The stock market is exactly like a mighty mountain. There will be market correction, there will be fault lines in the market. It was only because of these corrections I could buy some of my most important stocks at great prices -- e.g. DBS (bought at ~$14/share), American Express (bought at US$91/share), BlackRock (bought at US$354/share), ST Engineering (bought at S$3.44/share), China Mobile (bought at HK$51/share). If you believe the world will be a better place. If you’re willing to compound for the long term, stock prices go up.
If you’re worried about the stock market, feel free to hit "reply" to send me your concerns and have someone to talk to. I read my emails. xoxo And yes, this is how I protect my portfolio Sometimes, investing can be simple. Willie Keng, CFA Founder, dividendtitan.com P.S. Like this issue? Click HERE to join 5k+ investors reading my DT Compound Letter. I send my letters to your inbox every Sunday. |
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