Buy Great Companies While They’re Cheap, Rather than Try and Time the Bottom

It’s likely the stock market won’t end its current downtrend until the Fed stops raising interest rates. But given how bear markets work, we may be closer to the end than the beginning. The best strategy now is to start buying great companies at beaten-down prices, rather than wait for a move higher.

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  • That’s because the start of a bull market may come with some skepticism. And investors who wait can miss out on the extreme bargains from the low.

    By buying great, industry-leading companies now, that can be avoided.

    One industry leader that may be nearing a bottom is Nvidia (NVDA). Investors have been concerned over the company’s inventory over the past few quarters. But oversupply seems to be coming down, even with a slowing economy.

    The company’s push for new and better graphics processors makes it an industry leader, and when the economy takes off, shares may have already rallied hard.

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  • Action to take: Shares are worth accumulating here near 52-week lows. Investors can take their time, and buy a few shares on down days rather than all at once to offset the current market volatility.

    For traders, shares are likely still in a short-term downtrend. But a longer-dated option like the April 2023 $165 calls, last going for about $7.10, can deliver mid-to-high double-digit moves on a higher share price. Look to buy the option on a down day, and flip for profits on any big rally.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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