I love shopping at Costco.
I’ve been a member since 2011.
Sometimes, I go there just to just walk the aisles.
I can’t resist a good bargain.
I dance the jig when I buy something I want when it goes on sale.
Just the other day, I bought two Lucky Brand T-shirts.
For $11 each, how could I go wrong?
And most people I know like to get bargains, too.
Sure, they might not be as fanatical as I am, but they love a bargain just the same.
Just seeing the inside of a Costco warehouse gets my heart racing!
So, here’s what I don’t get…
When something we want goes on sale, most people rush to buy.
But with stocks, when the price heads lower…
Investors run for the hills.
On which planet does that make sense?
I’ve spent a lot of time trying to figure that out.
And just the other day, when I was pruning around my tomato plants…
It hit me.
Close Enough
When I saw the Lucky Brand tees for $11, I didn’t think twice.
I didn’t have to be in the garment business to know it was a bargain price.
I recently bought a T-shirt from LL Bean for $20.
So, I had some idea how much T-shirts were selling for.
Granted, the Lucky Brand wasn’t the same weight as the LL Bean…
But I was able to quickly see that $11 was a good deal.
In other words: I didn’t have to know the exact cost of the shirt to identify a bargain.
An estimate was good enough.
Knowing the approximate value was all I needed to make a decision.
So, here’s why most investors run for the hills when prices head lower…
They have no idea what the business is worth.
A stock is really a piece of a business.
And if you can estimate the worth of the business, you can see if you’re getting a bargain.
If you have no idea what the business is worth, buying the stock is just a guess.
You’re like a one-legged man in an ass-kicking contest…
Dancing the Jig
Looking at some stocks on my shopping list, I’m seeing bargains galore.
It’s like I’m walking the aisles of Costco with my shopping cart.
But this time, I’m tossing in stocks that are trading at bargain prices.
We recently added a company to the Alpha Investor portfolio.
It has two main businesses.
But the stock is trading only at the value of one of the businesses.
Mr. Market isn’t even pricing in the other business!
Now you can see why I get so excited when stocks go on sale.
Yes, I know that most folks can’t — or won’t — figure out the worth of the business.
But that’s why I serve it up to my subscribers on a silver platter…
Slashed to Nothing
In Alpha Investor, I do all the heavy lifting and give you my insight.
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If you buy quality businesses at bargain prices, it’s pretty hard NOT to make money.
But if you buy stock in a company with a great story and no earnings…
Simply because the stock price is heading higher…
Good luck — you’re going to need it.
Over the past year, unprofitable tech companies are down 80% to 90%.
They have a snowball’s chance in hell of ever coming back.
They’ll most likely go out of business or find a white knight to buy them.
Fintech company Klarna recently saw its valuation slashed.
In June 2021, it raised money and was valued at nearly $46 billion.
One year later and investors have zero tolerance for companies that are unprofitable.
The latest funding round valued the company at only $6.7 billion — 85% lower!
You gotta feel just a little bad for the investors who bought in more than a year ago.
Real Talk: Buy stocks like you do when you go shopping — stick to the sale items.
Intelligent investing is all about buying quality businesses at bargain prices.
Why complicate such a simple approach?
Regards,
Founder, Alpha Investor