Mastering Market Demons: $AIM, $WOW, $FLT
3 tips on how to combat your market demons and make money.
It is a crazy world sometimes. Let’s face it, as I said in today’s Blue Chip: investors are turning like sardines in a bait ball every time Trump utters his favourite word, which we all know is tariffs. Find out how our members combat the market demons and profit!
Tip 1: be patient! Wait for the price to come to you.
A few months ago I went on about how I missed out on a stock that I was particularly excited about, the caption producing AI-Media $AIM. Well back than it was approaching $1 having gone from 30 cents or so where we tipped it six months earlier. Well it’s back in the target range and I’ve turned buyer. I’m snapping them up.
Just to remind you, the story here is a company that is living up to its name and replacing expensive human captioning with its AI tool named Lexi. The energy on the call was good but the price is back and reflects just how early stage this company is.
That gives you a clue why it’s not on our best buys, but it also shows that most stocks will provide you with multiple buying opportunities.
$AIM is back in the target range and I’ve turned buyer. I’m snapping them up.
Tip 2: Don’t buy expensive stocks.
Just because you think a stock has defensive characteristics, this doesn’t mean it’s defensive for your portfolio. It’s all about what you pay. Look at Woolworths $WOW – it has gone nowhere for as long as I can remember.
The company trades on a PE of 23 times. You’re much better looking for stocks that are on lower multiples, considering the current uncertainty and the pressure on everyone’s wallet. Compare this this with the travel services group Flight Centre (FLT), which trades on 13 times. Sure Flight Centre’s product is not a necessity, but this is in the price.
What does a PE mean? It means that for every percentage point of earnings growth Flight Centre produces, you’re going to get more bang for your buck than from Woolworths. You’re coming from a lower base.
All things being equal, it would take you 13 years to get your money back from investing Flight Centre, versus 23 years from Woolworths – almost twice as long.
Tip 3: don’t panic.
The last lesson is the most simple: don’t panic.
All your investments won’t go right, but turning over your portfolio doesn’t often help. You are best off being patient and getting to know the stocks that you’re interested in before you jump in. We don’t change too much at Under the Radar Report. Most of the money made in the market is from holding and from buying stocks when they’re cheap. Just remember, most of our return comes from the price we pay.
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