This recent world pandemic called the coronavirus, or COVID-19, has caused chaos in the markets. So much so, that I recently wrote about the fears the coronavirus is putting into investors. Well, since then, we’ve had some wild days of trading, with some massive losses, among the worst in history, followed by a few hopeful sessions of historic gains. it’s getting to the point where we are in a bear market, and to that point, I sought out some information from absolute professionals to get you the best educational tools on how you should be investing in this bear market.
This advice is courtesy of the YouTube content below, and features Chris Hill of Motley Fool in addition to David Gardner, also of The Motley Fool.
Bear Marketing Investment Advice
Chris Hill: Hey, we’re coming to you from Fool Global Headquarters in Alexandria, Virginia. Thanks for watching. I’m Chris Hill, here with Motley Fool, Co-Founder and the Chief Rule Breaker, David Gardner. Thanks for being here.
David Gardner: Good to be with you, Chris. Good to be with everybody. Thanks for coming.
Chris: If you’re already a member of David’s Rule Breaker service, you know the man quite well. If not, you can go to fool.com/RB and join David’s service looking for great growth stocks out there. We’re going to get to some of the questions that are coming in already. Let me start with where we are right now. For the second time in a week, we had a circuit breaker triggered because the market fell so much so quickly. We are officially in bear market territory. It’s been a great ride for 11 years. Even though we’re long-term investors, a week like this really doesn’t feel good at all.
David: Yes, this is one-of-a-kind, Chris. The fastest market drop that we’ve seen, that I’ve seen. I’m 53. I think you’re 53?
David: How about that? This is something that we’ve never seen before. I will also say, we’ve seen this before. We’ve seen market drops many times over the years, and in future, we’re going to see many more. I hope it’s very evident to everybody who’s tuning in today that, from day one, when we started The Motley Fool 27 years ago, we said three things. Number one, the stock market is the best place to be for your long-term money.
Number two, that market tends to rise, on average, 9% to 10% a year, that includes every bad week, quarter, month, year, bear market, number two, that those numbers include all those market drops. Number three, make sure that you are invested in a way that you can sleep at night, that makes sense for you. We’re all different, so some of us don’t even own a stock, some of us own a few dozen stocks, some of us own a 100 stocks, some of us just own funds, or just for the first time thinking about investing in the midst of this crazy week.
Chris: We’ve got a chart I want to throw up if our producer, Dan, can put that up. You talk about long-term investing. Just over the last 50 years, we’ve seen the rise in the market with some tremendous drops. You and I vividly remember 2008-2009, the drop we saw there, and of course, the dot-com explosion in the early 2000s. Very painful times, but to your point, if you’re able to stay in, if you’re able to think in terms of decades and not months, then the rewards are there for you.
David: Yes, and I really believe that our biggest mistake is to react to what we’re seeing immediately. In fact, even as the market here closes today, in the next half hour, with most of the indices down around 9% right now. That’s already going to be in your rearview mirror at about 4:30 PM Eastern today, so I really don’t think you should be reacting to what’s already happened. I think you should ask about what’s happening going forward, and I don’t mean tomorrow or next week or 2020, I’m really looking at a minimum of three-plus years forward.
I’m suggesting that you’re going to be pretty well rewarded if you are buying here in the first or second quarter of 2020, not immediately maybe, but let’s look back five or ten years from now and see how well you’re rewarded for looking at some of the great companies of all time, which happened to be during our time, that you and I can become part owners of right now.
Chris: I know you’ve got a couple of stocks you want to share, but first, in terms of broad strategy, because everyone’s going to look at different stocks, one of the things you had talked about recently on your podcast has to do with allocation. Can you share a little bit more about, for people who are looking to be opportunistic, to buy into a market that’s falling dramatically for the first time in a very long time, how they should be thinking about allocation?
David: Sure. Well, in general, I think I’m going to, in this case, speak to people who have investment portfolios. If you’re just getting started, this is not going to be as relevant, but for a lot of us, we’re invested and we’ve been invested for years and years. I’m a big fan of saving money every two weeks and continuing to put it into your stock market portfolio. That means, riding right through this month, this week, this quarter, I’m going to keep doing the same thing that I was doing, the quarter before that, and the three years before that. Saving money, and I’m going to put it right into the stock market, some of the best companies that I can find.
We’ll talk about a couple of examples in a little while, but in terms of allocation, if you don’t already have at least, I’d say, 20 stocks or 20 different funds and stocks, I would tend to put new money into new things, not existing things. On the other hand, if you already have a very full portfolio, I would be asking myself, forget what my allocations are in these companies, looking forward over the next 10 years, where do I want to have my new money now? That might lead you to some of your favorite existing stocks you already have or it might lead you into some of the newer ones you were starting to nibble at, and you start to fill out those positions.
Again, there’s not a one-size-fits-all answer to this, Chris, other than, I think each of us should be tending to add to things that are winning, not looking at really depressed, beaten-down industries or companies or really high dividend yields and throwing our money toward that or crazy penny stocks that are claiming coronavirus cures. I would be, of course, avoiding all of that. I would be looking at strong companies that are going to win over the next 10 years.
Chris: You just touched on something that we’re hearing a lot of, particularly, over the last couple of weeks as the market has fallen, and that is the notion of doubling down. “Well, I bought this stock. I really like this business. It’s been cut in half, now it’s like a two-for-one sale.” I get the sense you’re not a big fan of doubling down.
David: Well, I’m not, but in general, usually our best investments are going to have larger allocations. If we’ve allowed a great company, like, Amazon, to grow in our portfolio, we’re going to have a large allocation. Of course, we all have different numbers, but you have to think about, I would say, you shouldn’t be overallocated into any new position by more than 5% of your portfolio, for example. Let’s pretend that you bought your 20th stock and it was 5% because you divided all your money into 20 slices. You just bought your 20th stock three weeks ago, and all of a sudden that’s been cut in half.
Well, from my standpoint, it’s fine to add to that, probably the company’s earnings report hasn’t totally changed. It’s just the market perception of the whole market, so you could add back to that position, Chris, and refill that back to 5%, but outside of crazy times like this week, the last couple of weeks, generally, you should be adding to your winners, not to your losers. Winners win.
Chris: Let’s get to the stocks that you’ve got for folks who are looking to build their watchlist, looking to do a little shopping out there, if you will, and then we’ll start getting to some of the questions that are coming in. What do you got?
David: Sure. I’ll just give two examples. One of them is an opportunistic company that fewer people know about, and one of them is a big successful brand that I highly prize. The first one is Zynga. Zynga is a mobile games company. In fact, if you’re a Motley Fool Stock Advisor member, then you received our message a few weeks ago that this is the best buy now. We like this company a lot. The company is well-funded enough that it can buy big brands like Game of Thrones or Harry Potter, and it creates the mobile digital games, usually free-to-play, with monetization right there for some of the best-known brands today.
Zynga is about a $6.5 billion company, depending on how the market cap is shaking out any given hour right now. It’s a successful company. It’s well-positioned in a world where increasingly people, at least this year, probably, are looking toward at-home entertainment, things that can be delivered over-the-air. You don’t have to go to a store to purchase Zynga’s upcoming Harry Potter game.
I like video game businesses anyway, but I particularly like them in this environment. This is not a big, dominant player, this is a smaller player, but within the mobile game store and space, this is a real leader. I like Zynga. You’ll notice the stock hasn’t gotten crippled in the way that many other stocks have in the last 10-15 days, and I think that reminds us that this is a more resilient business, but I also like it because this is a small-cap company, so it has a little bit of zing may be in it, let’s see, in the years going forward.
Chris: Well, and as you just indicated, worth remembering that as painful as this is, and the last few weeks really have been painful, it comes at the end of an historic bull market run.
David: Sure. It is, one year in three in market history, the market has dropped. That’s just the game that we’re all playing all the time. I hope I haven’t gotten spoiled. I know you haven’t gotten spoiled, Chris. I hope you haven’t gotten spoiled to thinking that, “Of course, the market goes up every year,” because it doesn’t. Two years in three, it does go up, and we’ve had a lot of those years. Looks like this might be one of the years that it’s down, and it’s very disconcerting to see how fast it’s going down, but as I’ve often said in the past and I’ll say it again right here, stocks always go down faster than they go up, but they always go up more than they go down.
I want to make sure everybody can hold both those thoughts in their mind, because that’s not just true of this week, although, surely, it is true this week. That’s just true of the game that we’re all playing, a beautiful game where we all win together by finding great companies, holding them over the course of years and prospering together finding the best companies. Stocks always go down faster than they go up, and, boy, can I see that today once again, but they always go up more than they go down. Take a look at the graph of the stock market in the last century. It goes like that.
If you zoom in on any two or three-year period, it might have gone like that, and one year in three, it dropped, but I predict, over the next century, the stock market goes like that again. We happen to be zooming in right now to a 25% drop in a matter of a couple of weeks. Remarkable.
Chris: One more stuff before we get to the questions that are coming in. I’ll just preview it by saying we’re going to be covering a lot of areas in the market when we get to the question.
David: All right. Well, let’s get to as many of those as we can, as fast as we can. I’ll be quick. My second stock is Netflix. I think that Netflix is not only one of the great companies of our time with visionary leadership, worldwide footprint, and they’re out in front of everybody else.Reed Hastings is taking them out of DVDs in the streaming before anybody understood streaming and then took streaming globally before anybody could even scale that way.
While there are a lot of other Me too players, things like Amazon Prime, which I like, and Disney+, which I like, and HBO, which I like, it’s not just about one winner. This is an entire field that is ripe for prosperity. Netflix is the leader. Again, we’re maybe living in a short term era anyway where at-home entertainment makes a lot of sense to me. I’m a big Netflix– It’s my biggest personal holding. It’s been hard to watch it drop 10% or more multiple days in the last three weeks.
I’m certainly a poor fool than I was three weeks ago, but I’m looking ahead not backward and I’m asking where do you really want to put your bets? Pretty sure Netflix is going to be a global leader for a good time to come.
Chris: Well, real quick related to that, you’re absolutely right. In the short term, home entertainment is going to be more important. For sports fans, they’re going to be fewer options with the cancellation of the college basketball tournament, the NBA, the NHL, major league baseball. Are businesses that have intellectual property may be where we should be looking as well because it seems to me that while Netflix is certainly going to benefit from the rise in at-home entertainment over the next couple of months, it seems as likely that businesses that have intellectual property and that’s where maybe a company like Disney+ comes in, they’re probably in pretty good shape too.
David: Yes. I mean, I like them a lot. As a big sports fan, I know I’m not the only one in this room. It hurts a lot to see all of the sports basically cancel themselves. Yesterday I was enjoying you on Market Foolery with Bill Mann. You guys were talking about how mobile betting maybe makes more sense to the world or to local jurisdictions that can get tax money if you’re able to bet on your phone instead of open-air betting or whatever people do in Vegas but if there are no sports to bet on, which is actually what we’re staring at now in the short term, that hurts those industries.
Clearly, the strongest businesses are the ones that are digital, the ones that control their relationship with the consumer. They’re not going through a middleman and where they create content that can be used anywhere. Zynga is an example. Netflix is an example. There are a lot of other examples, but before we get to all the questions, Chris, I want to end by saying that this is all a very short term phenomenon. By the way, video games and streaming entertainment was great before coronavirus.
It probably can live much better than most things through coronavirus, but let’s not overreact to the short term. A lot of this horrible, heartbreaking global story, a pandemic now official, is going to take place over a matter of months. It’s not going to be over years. Try to think forward. Be positive. By the way social distancing, Chris, you and I six feet apart. Right? You look good to me. Do I look good to you?
Chris: From that distance, yes.
David: Okay, good. Let’s all stay healthy. Reduce as much as possible interactions with as many people as possible for just a few weeks. We’re such social creatures. It’s hard to do, but boy being a little paranoid on the front end is going to help all kinds of people on the back end. I want to make sure we’re keeping everything in perspective here and I also don’t want to suggest that the only stocks you should be looking at are ones like zoom video that thrive in this environment. This environment I think is pretty temporary.
Chris: Let’s get to the questions that are coming in from the viewers. We’ll start with a question about Shopify. Cameron asking, “I bought Shopify at $562. Should I average down now or wait?” I’ll just add parenthetically, it is down about 10% today trading for about $380. This gets to a question that we see a lot lately which is, “I bought this company. I like this company. It’s now trading for significantly lower. Should I buy more shares?”
David: I’m going to give a very standard answer that speaks to a lot of other stocks too. I’m aiming at Shopify, but I might start repeating myself if you keep asking me about individual stocks. It’s a great question though. Cameron, thank you very much and here’s my answer. You liked it a few weeks ago. It was at $550. It was at $550 a month ago. It’s now at $380. Very little has changed for Shopify’s business in the sense that fundamentally the business works. It’s a beautiful business.
It’s threatened, of course, as everything is especially if there are commercial shutdowns and all kinds of crazy stuff happening over the course of a couple of months. I like Shopify a lot. It’s been a winner. My suggestion for anybody who has money coming in every two weeks or is sitting on cash that they were holding back is to mechanically put it into play in a way that you’re not trying to be a hero by putting it all in at once like tomorrow morning, but how about just divide up any lump sum or money you have coming in and every two weeks, invest a fraction of it and just keep going through March, April, May.
I hope you are already doing that through December, January, February. It’s all about sticking to the plan. The Motley Fool has provided, I hope, our worldwide membership with some of the best ideas you could have for the stock market, but it’s up to each of us to actually have a plan and act on it. Most successful members, we have a ton of them globally, thanks to the wonderful company that we’ve helped create together, Chris, with so many other fools and members.
Most of the people who succeed are simply sticking by a mechanical plan of saving and investing and not trying to be a hero or guessing market movements. Shopify, 553.80 one month later. You’re probably going to be pretty happy 5 to 10 years from now if you’re buying Shopify now, but it could go down to $200 tomorrow morning.
Chris: Christine is asking about airline stocks and hotel stocks. I’ll just broaden Christine’s question because travel is impacted around the world and I’m curious, is there any part of travel, whether it’s airlines, hotels or a middleman like Booking Holdings that you think is challenged one more than the other, or looks more attractive one more than the other?
David: I think that travel is obviously such a huge word. I mean, there are multiple industries packed underneath that rubric. For me, I think getting away from that, looking at balance sheets of companies. I mean, the best understanding of who’s going to survive to thrive and who may not survive is who has cash on their balance sheet, who has debt on their balance sheet, who has way too much of one versus the other. That’s what I’d be looking at.
Of course, the big reason that the airline stocks got really hammered today, Chris, I mean, I’m just looking here and a lot of them down 15% to 25%. Some of my picks, unfortunately, companies like Hawaiian Air didn’t do so well today. Alaska Air, JetBlue and then the big players, American United, is that they have a ton of debt. Most of these are very heavy businesses to run.
They’re probably going to need some form of aid/bailout. They were doing pretty well up until this black swan event occurred, but you can see within this context those are very threatened because of their balance sheets. A company like Booking is a very strong balance sheet. This is a company. This is one of our longterm holdings. This is a stock I certainly favor. I own it myself. It’s because it has the resilience. It can evolve through a tough environment because of its cash.
Chris: You look at Booking Holding, it is one of those. You were talking about Shopify, Booking Holdings is basically down about 35, 40% from its high. It’s still the same business. Obviously, they’re going to see some lower activity.
David: This has happened before, by the way. Well, while coronavirus is truly, I hope, a one of a kind event for most of us over these decades. Do you remember when the volcanoes blew up over Iceland and it coated all of Europe and all of a sudden people wouldn’t fly for a month or two? This is five or six years ago, spacing the exact date, but that really hurt Booking. It dropped– I think it got cut in a half over the course of about a year or so.
These things kind of recur, but then zoom back out and look at the longterm performance, the only term I care about. Look at these companies and see how well they do despite the gaps and drops that they’ve had. We’ve talked about Netflix earlier. Quickster self-imposed gunshot wound in 2011. Netflix went from 75 to 25. That’s a far worse drop than we’ve seen in these few weeks and yet Netflix went on to rise and become the great stock of the last 10 years.
Chris: Lucas asking, “Should I buy shares of Disney right now? It seems like parks will be closing down pretty soon. When do you think it’s time to buy in?” I’ll just add that one of the things Disney has done a good job of, and we’ve started to see this out of other companies as well, is the communication from management. The guidance that they update for investors. They’re being as transparent as any company out there related to this virus.
David: Of course, I love Disney. I’m fine with you buying Disney right out. Just realize that anything that you buy right now– I mean, we happen to be date stamping this. This is on March the 12th, 10 minutes before the market closes, one point in time, YouTube live event. Who knows where the stock market will be in one to four weeks? It’s very hard to know. It could be dramatically up.
Part of me not only hopes that, of course, but thinks there’s a chance because I think we’re seeing all of the negativity, all of the cancellations and closings, it’s casting a poll over everything, the economy included, that’s going to hurt, but I think we’re forgetting about some potential sources of good news or surprisingly good developments. As a Fool who likes to challenge conventional wisdom, as I try to read the tea leaves or take the pulse of the room, I feel like there’s a huge amount of negativity right now, so I allow myself the possibility that we might have quite a snapback in the next couple of months. Who knows?
We really don’t know, and that’s why we shouldn’t be head faking ourselves or guessing with our money. We should follow a regular plan, save every two weeks, take lump sums, divide them in fractions, and my God, Disney’s a great company. Of course, it’s tough to think about all those open-air parks that are not going to have as many people in them, but then you also think about Disney+. Did you make it through The Mandalorian, Chris?
Chris: As quickly as possible, yes.
David: All right, would you like to see it again?
Chris: I’m waiting on season two.
David: All right, there we go. Now that won’t come probably during this period of a few months, but there’s a lot of streaming content Disney has. Video games, entertainment, television, all of these things are great tools in the gigantic Disney toolbox. Some of them are weaker, some of them are stronger, but of course, we’re not buying for this quarter, I hope, we’re buying for the next 10 years. That’s what I’m doing, so, yes, Disney, great.
Chris: A question from Ken about Software as a service. He asked, “Should we add to our SaaS holdings? They’re getting hit extremely hard today?” Software as a service, I think most people here at The Motley Fool are believers in Software as a service as a general principle. That said, there are certainly some stocks out there, it’s not surprising to me that they’re getting hit, because everything’s getting hit, but also some of them were trading at really high multiples.
David: Yes, sure. I’ve never had a problem with companies that trade at really high multiples. In fact, those have often ironically been my best picks. Amazon was trading at a really high multiple when I first picked it, or Salesforce didn’t look cheap when we first added it to Rule Breakers more than 10 years ago. We’ve seen some amazing companies come along with high premium valuations that then went on to become the best stocks.
They looked like the most overvalued and they ended up being the best stocks. Anybody who knows the Rule Breaker approach, listens to my podcasts Rule Breaker Investing, where I try to speak to the market this week, by the way, in my thoughts on the world in 10 and a half chapters. If anybody wants to hear more than just our YouTube Live event today, I’m talking to you about that, but these companies usually never really do look cheap.
Even though a lot of them are down today, the SaaS companies, they’re still trading at big multiples, but that’s because they deserve it. Not every stock should be trading at the same multiple, businesses that are really light, high margin businesses that proliferate and have social media or viral components to them deserve excellent economics and high relevance, deserve the valuations that they get.
I’m never somebody who looks at one group and says, “Those are overvalued and these are undervalued.” I tend to just think the valuations are generally pretty good on the market, but the problem the market has it’s always so short term. The reason we win as investors is because we look past the six months, which is about how far I think the stock market ever looks, about six months ahead.
Chris: Mark asking, “Is it a good time to buy some small-cap growth stocks or are they too susceptible to going out of business?” I like that question because it points to something you touched on earlier, when you were talking about the strength of different companies’ balance sheets. A lot of time with small-cap growth stocks, we want them as investors to be investing that money. We don’t want them to be profitable right out of the gate. Times like these, though, it can be a little bit tougher to manage that.
David: Small-cap, by the way, has lots of different meanings to different people. For me, I’ll just say that small-cap means something like– This is arbitrary. You can see I’m making this up, let’s say $3 billion to $10 billion of market cap. Now, if that sounds big to you, then you’re in micro caps in my mind. Some people might think that small-cap extends above 10 billion, I don’t know, but I’m just giving you my numbers.
Within that group, there are companies that can run themselves really effectively through commercial shutdown environment. We’ve talked about a number of them in our half hour together, and then there are others that don’t. I think restaurants are very stressed, so you might have a small-cap growth restaurant, I would probably avoid that. I tend not to think in terms of sectors or capitalizations. I also never say things like growth stock or value stock.
I reject those terms, which we can talk about some other time, but I think you should be asking yourself, “What are the businesses–?” The beauty of them is that they’re upstarts, so they have a lot of growth, but what capability do they have to evolve and survive in a very hard shutdown commercial environment over a temporary period of time? That’s the question I’d be asking. Some small caps are going to look good in that, and others won’t.
Chris: John asking, “It seems like most of the recommended stocks are near their 52-week low.”
David: Three weeks later?
Chris: Yes, I saw a stat on Twitter today of the S&P 500, somewhere in the neighborhood of 350 stocks in the S&P 500 are hitting at 52.
David: Was that before market closed today? Was that just the morning?
Chris: That was the morning, so that number is probably higher now. To John’s question, “A lot of stocks near their 52-week low, is that then a signal to buy or should I not be greedy thinking they might go lower?” It’s really tough to time the bottom.
David: I feel as if it’s just the same question over again. It’s somebody hoping to guess whether now’s the time to jump in. I’m going to say it emphatically again here, I don’t think that’s the right question. That’s not the right framework or mentality that you should have, because I don’t know. I had no idea this was going to happen three weeks ago, and I don’t know what it’s going to be like three weeks from now.
Let’s not play the guessing game over weeks, let’s play the only game that we know we can win, and we surely have, will, and will continue to do so, and that’s the long term game. I have no idea whether it’s a good time to jump in tomorrow morning or not, I won’t be. I’m just doing my normal program that I’ve been talking about. Save money every two weeks, add it to your investments.
Try to save 10% of your salary if you can, by the way, 10% or more, and then put that every two weeks toward your next great investment. Adding to an existing position you love that I hope is a winner, or opening up a new position, it might be a stock, it might be a fund. I wouldn’t want you to score me for my short-term predictions, and I don’t make them so that you can score me, because I don’t want to mislead people into stupid decision making, whipsawing around what happens in a given day or week.
Chris: I was just going to ask you for your six-month price target. I guess I’m not going to do that now.
David: At least you’re asking me six months, naturally I feel like some of our mentality is six days, but that’s also understandable because the degree to which, in a exponential growth environment, headlines are changing is really remarkable. Just to be watching the North Carolina basketball team get eliminated in the ACC tournament yesterday, while the NBA cancels or announces suspension of its season, and then 12 hours later, the ACC tournament has canceled itself.
These headlines are firing so fast that this is what exponential looks and feels like, and it’s very anxiety-creating for a lot of people, but I tried to steel myself against it and just stick with the plan. Again, I talked a lot more about that in my podcast this week, if anybody needs a little bit of a picker-upper.
Chris: Well, speaking of picker-uppers, a very interesting question from Lauren, who ask, “Can you talk about the importance of everyday optimism in your investing approach?”
David: Yes, I’d be happy to. I’ve always loved the Henry Ford line, “Whether you think you can or whether you think you cannot, you’re right.” I think the world is full of the achievers or the believers, and a lot of them are entrepreneurs, people who create jobs, people who create value for others. They were the ones who believed, so optimism is not an emotion or a state of mind, I believe it’s a creative force.
Truly, if you think you can, you stand a much better chance of doing so, and if you think you cannot, it’s the opposite. I also think it’s the only right way to approach life. I realize there are pessimists out there, and my pessimist friends add value to the world, because there’s a yin to somebody’s yang, but if you really want to talk about a life that thrives over the only term that counts, over the long-term, I think you’re a believer. I think you’re looking to do good in the world, and I think you are doing good in the world.
You’re surrounding yourself, I hope, as much as possible by other people who recognize that and do that. I’ll close my shaggy-dog answer by saying thank you for that question. I love where I work, because of The Motley Fool I am surrounded by about 400 people on a daily basis, most of whom are highly engaged, and love our work to make the world smarter, happier, and richer. Never one without the other two. I have felt for 27 years, the positive energy that comes from people who are not just dreamers, but doers.
Chris: If you’re enjoying the video, as always, please give us a thumbs up. It helps other people find the video and we like doing these videos. Again, go to fool.com/RB, you can get details on some of David Gardner’s newest investing ideas. Last question before we wrap up, David, Gina ask, “I’m new to investing. I wanted to start, but is now the time to start at this low market point?” Gina’s question and we’ve seen others like it really speak to emotion, and how emotion really hasn’t been a problem for the past decade.
If anything, it’s been working in favor of getting people excited about the market, but it’s always tougher, when, as you said the headlines are what they are. The pessimists are emboldened because at least for a short amount of time, they’re right. You and I have joked with others here at The Motley Fool, it seems like every year, for the past decade, while the market was steadily going up, every week you could turn on financial television and find some Perma bear out there saying, “Well, it’s about to end, the easy money has been made.” To Gina’s point, it’s a little bit tougher at this point in time.
David: Yes. Gina, I think you should get started. Here’s how I think you should get started. Whatever you have, let’s just say you’ve got $300. I think you should take one-third of
it and invest it tomorrow morning. That means you still have two-thirds sitting back there, but you’re in the game. I think the biggest mistake most people make is they wait, wait, wait, they wonder is now the time? The market drops, it makes them scared, so they don’t buy, then the market snaps back, goes up, they feel like they missed it.
We have done a great job on behalf of our worldwide membership at promoting this concept of buying in thirds. Toe-dip, take one-third of your $300 or $100 and put it in the market right away. Then make a plan for the other $200, maybe a month from now, add the next $100, the month after that add the next $100 so you’re not playing the guessing game of Russian roulette against the stock market that’s dropping or rising 5% to 9% every day, for multiple days. You’re not playing that game, but you’re getting started.
You’re going to be able to tell your kids and your grandkids that your first stock investment was made right into the face of the coronavirus after the market already dropped 25%. One of my favorite Fools of all time, Jeff Fischer, I know many of you know him, love him, Motley Fool Pro, he now works at 1623 Capital. Jeff first came to The Motley Fool as a paying member, way back in our AOL days. Jeff, when I first met him, he said, “I got started investing as a kid in college. I opened up my account the day after the 1987 stock market crash in October.”
I still remember that about Jeff, about 30 years later. People are going to remember that about you, Gina, when you tell them that you put in a portion, you toe-dipped in the face of one of the ugliest, fastest drops in stock market history.
Chris: All right, David Gardner, thanks so much for being here.
David: Thank you.
Chris: I really appreciate it. Thanks, everyone for watching. Again, you can go to fool.com/RB to join David and his growth stock investing service Rule Breakers. I’m Chris Hill, thanks for watching. We’ll see you next time.
For me, one of the best ways to invest money is to gather information from other people. This is why I routinely post information from people who I follow online, in social media, and on Sirius XM Radio.