At Oberdorfer Financial, we believe your money should always be on a mission.
Each and every day the market overreacts to news
A report comes out and a stock drops 5%. Another report comes out and a different stock drops 8%.
But is that company reported on now a different company than it was before the report?
That’s the question we ask ourselves when considering buying the day’s hardest hit stocks. If the answer is no, then likely the market has overreacted and the stock is now offered at a discount. One of our strategies is to buy stocks in this manner, especially if the stock is already owned (and therefore liked).
This is also an opportunity to start new positions (buy your first shares) of a company too
We don’t consider any and all stocks that have a bad day though. We pre-screen stocks, get to know and understand them well, then add them to a watchlist if we like them. From there we watch and see which companies in the watchlist are unjustly punished with news. When it makes sense, we start or add to the position. Over time this builds a quality portfolio of stocks purchased at a discount.
This can be done with value or growth stocks. If done with growth stocks the overall effect is that one is buying growth stocks at discounted (value) prices. Frankly, it’s proven to be a powerful combination over time, and grows more powerful the longer the strategy is used. As the growth stocks grow, the value-priced buys add up, and the portfolio develops.
This is also a nice strategy to use for those that like DCA (Dollar Cost Averaging). You can buy the stock that was most unfairly punished that week with the DCA money you’ve contributed to your brokerage account.
Capitalize on an emotional marketplace by being prepared and emotionally poised yourself.
Truly,
Matt Oberdorfer
Founder & Financial Advisor
Oberdorfer Financial at OBFI.com
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Disclaimer: This content is for informational and educational purposes only and should not be considered investment, tax, legal, or insurance advice. Asset location strategies are not appropriate for every investor and should be evaluated based on individual circumstances. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results.
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