Stop swinging at 100 mph fastballs

Stop swinging at 100 mph fastballs

This article appears courtesy of RiskHedge.


Imagine you’re playing baseball... and your life depends on hitting the next pitch.

Would you rather face a 100 mph fastball...

Or a gentle, underhand lob?

You’d take the lob, of course.

Easier is better in investing, too.

Yet right now, investors are unknowingly making the wrong choice. They’re swinging at 100 mph fastballs...

While the market is lobbing us some of the easiest opportunities we’ve ever seen.                                                                                                                                   

I’m talking opportunities to make 200–300% on your money, with what I believe to be very high odds of success.

But I get it.

Some of these “fastballs” are enticing...

  • For example, I get asked all the time about Zoom Video (ZM)...

“Chris... Zoom stock is down 80% from its pandemic highs...

It’s still the #1 video chat service by a wide margin...

And remote work isn’t going away...

Therefore, Zoom stock must be a great opportunity…

I agree with most of this. Zoom’s stock has plunged from a sky-high $588 to $114. Most stocks that lose 80% of their value never recover.

But I expect Zoom to find its footing. It’s a great product and a good business. There’s a good chance its stock will rebound and be higher a year from now.

  • But you’re making your life needlessly harder by swinging at uncertain opportunities like Zoom today.

Simply put, Zoom—and many other tech stocks that flew high in the 2020 mania—live or die on the success of a niche technology.

Niches are small and hard to defend.

Zoom has the best video meeting experience. But it has dozens of competitors. Some of these competitors are the richest companies on Earth.

Google (GOOG) has Google Meet. Microsoft (MSFT) has Microsoft Teams. They’re not all that different from Zoom. And because they’re integrated into Microsoft’s Windows and Google’s Android operating systems… they’re positioned to box Zoom out.

Maybe Zoom will beat them all, and its stock will soar 500%. That’s a real possibility.

In normal times, I might take that bet. I’d accept the sizable risk of owning Zoom in exchange for a chance to cash in on its 500%+ upside.

  • But these are not normal times.

You don’t have to take big risks to make big returns today.

The market is experiencing an unusual setup.

Its selloff is handing us a rare opportunity to buy dominant, world-class stocks at prices I never thought we’d see again.

Dominant is the opposite of niche. I’m talking companies that control the resources that power the global economy. The ones that sell computer chips, payment systems, software, security, and other necessities the world cannot do without.

Take Amazon and its legendary infrastructure. With around 500 million square feet of warehouse space strategically located around America, it can get almost anything to almost anywhere in the country in under 24 hours.

Its cloud computing service powers about 40% of the internet.

Imagine Amazon goes out of business tomorrow...

Many folks wouldn’t get basic necessities. Thousands of companies would freeze up. Millions of Americans’ livelihoods would be wrecked.

Large parts of the internet itself would shut down.

  • Much of American commerce would grind to a halt.

Now imagine if Zoom goes out of business.

Folks will switch to Google Meet or Microsoft Teams and… that’s about it.

All else being equal… wouldn’t you rather own the company that’s essential to American prosperity?

In normal times, you have to “pay up” for dominant companies like Amazon. Their stocks command a large premium.

But remember… these are not normal times. The Nasdaq had its worst first half-year ever.

This has created a temporary imbalance in the markets that—for probably a very limited time—allows us to buy stock in dominant companies like Amazon at “no-brainer” prices.

  • So, before you go swinging at a 100 mph fastball…

Think about two of the most important words in investing:

“Opportunity cost.”

Opportunity cost is what else you could be doing with your money.

Niche stocks like Zoom, Peloton (PTON), and Teladoc (TDOC) have all lost more than 80% of their value.  

They might recover.

They might hand out nice profits.

But might isn’t good enough for my money.

It shouldn’t be good enough for yours either.

Not in rare times like today… when you can buy dominant stocks that are highly likely to double or triple your money.

  • In my 2022 Crisis Report, the 10 “BUY NOW” tech stocks I recommend aren’t just cheap:

They DOMINATE.

Amazon was a “final cut.”

It didn’t make my 10 recommendations.

Because I found 10 other companies that are just as dominant… but available at even better prices.

Fair warning, the window seems to be closing quickly, with stocks up 10% in the last couple of weeks.

This is one of those times where if you hesitate, you might miss it.

So, make a decision now, while you’re thinking about it.

I’d hate for you to look back on this in a year and wish you’d acted.

Thanks for reading,

Chris Wood
Editor, Project 5X

P.S. In my new 2022 Crisis Report, I lay out my top 10 dominant stocks to buy right away. These industry titans are growing, innovating, and selling at a major discount today.

Simply put, buying these stocks gives you 300%–500% upside… with relatively low risk.

Inside my report, you’ll get a rundown of each business... My outlook on where they’re headed in the next few years... And why they’re a perfect way to exploit today’s market “imbalance.”

Plus, simple, easy-to-follow instructions on how to buy them if you choose.

Discover more here.

     
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RiskHedge

This article appears courtesy of RH Research LLC. RiskHedge publishes investment research and is independent of Mauldin Economics. Mauldin Economics may earn an affiliate commission from purchases you make at RiskHedge.com


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