2022 is turning out to be the toughest trading environment since the early months of 2020… when words like ‘coronavirus’, ‘pandemic’, and ‘lockdowns’ first entered our psyche.
In fact, it’s fair to say that 2022 is actually a tougher environment than 2020. This is because the problems of 2020 could be mitigated (from an economic and financial markets perspective) by the action and coordination of fiscal and monetary authorities all over the world. This created a ‘goldilocks’ environment after the market bottomed in March 2020 which carried over into 2021.
2022 is an inverse of sorts with increasing geopolitical risk and a hawkish Fed because of raging inflation. That’s why year to date the S&P 500 is down by 11%. Even worse, many of the high-flying stocks of the recent past are in bear-market territory. That’s why the beloved Ark Innovation Fund (ARKK) by Cathie Wood is down 38% in the early stages of 2022.
However, just like the best time to buy in 2020 was when fear, uncertainty and doubt (FUD) were the prevailing emotions, the same will be true in 2022 as well. And, today, I want to specifically talk about why NOW is the time to look at stocks under $10. The true hidden gems of this year’s stock market.
Buying During FUD
Intuitively, every investor knows that the best time to buy is during bear markets or corrections despite negative headlines. Essentially, the market discounts all of this bad news, and investors are able to look forward and focus on improvements on the horizon.
Sometimes, the market can get so bearish and pessimistic that simply the absence of bad news is enough to get it going higher.
Often, the market is anticipating positive developments that aren’t easily apparent to investors. The most recent example is the market’s steady grind higher, following the March 2020 lows, which correctly anticipated the swift recovery in the economy and corporate earnings.
Therefore, investors shouldn’t make the mistake of ignoring opportunities in the market, because of “bad news” or other risks. It truly is the best environment to “buy low and sell high”.
Why Stocks Under $10?
Another relevant example for the moment is World War 2. Most people might think that the market bottomed only after it became clear that the Allied side would triumph.
This is not true.
In fact, the market bottomed in 1942, well before the war was decisively won. Interestingly, one of the most successful investors of the past century - John Templeton - actually made a brilliant trade that laid the foundation for his future success.
According to GuruFocus: “Templeton made a large $10,000 bet on stocks trading on the New York Stock Exchange by buying every stock trading under $1 (104 equities). Near the end of the war, he sold the stocks for around $40,000.”
This was early in his career. He went on to launch the Templeton Growth Funds in 1952 which was the largest mutual fund company for many years. Until his retirement in 1992, his fund averaged an annual return of 15%.
Templeton understood that these low-priced stocks offer the most upside, especially during a bear market or market correction. These are the stocks that institutions have mostly given up on which means that there is more upside in the event of a turnaround. Think of it as the market’s discount aisle, where you can find the most egregious opportunities.
That’s exactly why NOW is the time for investors to also consider stocks under $10.
What To Do Next?
The best place to consistently find these winning low-priced stocks is in my POWR Stocks Under $10 newsletter.
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Beyond great picks I will also explain the all important “WHY” behind each move we make. Why to buy now...and when to sell for maximum gains.
You can experience these market shattering returns for yourself, by taking a risk-free 30 day trial for just $1.
And now is the perfect time to do so because of the current market environment. Plus I am putting out 2 new trades this Monday morning 3/14.
To get these 2 timely trades…plus full access to the rest of the stocks in the POWR Stocks Under $10 portfolio…and all the trades to come in the future, then simply click the link below:
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All the Best!
Jaimini Desai
Chief Growth Strategist, StockNews
Editor, POWR Stocks Under $10 Newsletter
SPY shares were trading at $425.97 per share on Friday morning, up $0.49 (+0.12%). Year-to-date, SPY has declined -10.31%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles.
The post How to Unearth “Hidden Gem” Stocks During this FUD Market? appeared first on StockNews.com
