Friday File: Possible Panic, Possible Buys and Sells

A buy from the watchlist, plus thoughts on Tencent, Alphabet, Naspers, Square, Altius and Five Below

By Travis Johnson, Stock Gumshoe, March 23, 2018

I just realized that we blew through the 11-year anniversary of the launch of Stock Gumshoe just a few days ago… and forgot to have a party or light the fireworks or anything. Ooops. Guess I was distracted by this nutty stock market… so, “happy birthday to us!”

And thank you, dearest Irregular, for making it all possible with your support. We rely not just on your subscription dollars to keep the lights on, but on your keen mind as you send us appealing teaser ads, make wise comments on our discussion threads, and, yes, tell me when I’m being a bonehead — I couldn’t do this every day without you.

So what comes to mind as we enjoy another week of that favorite classic horror movie, The Return of Volatility? Will we close out the week with another wave of panic as investors fret about holding their positions through a “who’s gonna tweet what” weekend? I don’t know, but there’s some chance of real shakeup in the markets if this latest trade war panic doesn’t get accepted as a “buy the dip” moment, so hopefully we’ll see prices fall enough that there will be compelling buying opportunities under the surface.

Stock investing is based on hubris. To invest in select stocks is to puff out your chest and say that your opinion or analysis is worth more than the average person’s. Or the average investor’s, at least.

So to make that work, you have to be above average in some way. You need to be above average in your determination to identify unique ideas or perspectives. You need to be above average in your patience level. But more than anything else, you need to be above average in your ability to think independently. If you’re just going to sell everything that’s falling and buy everything that’s rising, you might as well just spend your time doing something more fun or rewarding, or indulge your gambling instincts at the casino, and invest all your important money (retirement savings, college savings, etc.) in index funds. That’s what indexes do — they own everything and make little to no value judgement, but on the margin they buy rising stocks and sell falling ones.

And there’s absolutely a place for that. Index funds and/or low-cost active funds that are widely diversified are a great place to put the ...