Stock Market Just Exploded... Is Now A Good Time to Buy Stocks

Trump has said that now is the time to buy stocks and we just saw they did a deal with China extending the tariffs to 90 days out and the stocks are skyrocketing. So was he right? Was he leading us down the right path or is he leading us down a poor path? Where are we right now? Where are we in the terms of where we have been in history? Well, it's very simple. Here's a stock going back to 1929, the average, we are over a hundred percent overvalued. And that's before today's big surge of 3%. We are a hundred percent overvalued and Warren Buffett considers this the most reliable metric of all time. Now, of course, people are going to sit there and say, Oh God, Warren Buffett's a dinosaur. And this is such a bad metric because it doesn't value companies and what they make internationally. I want you to do me a favor. If you think that, shut the **** up. That's absolutely stupid. And like I said on Twitter last week after the Berkshire Hathaway event, I'm glad Berkshire Hathaway event is over because now it's a bunch of people acting like they care about what Warren Buffett says and they go against it every day in the market because that's what's out there right now. Guys, what we're here for is principles, not predictions. Disciplined investors don't care about the short run. In the short run, stocks are a voting machine. In the long run, they're a weighing machine. But let me show you guys history and that fear I've been talking about and when the best time would have been to buy. So guys, this is a chart looking at the S&P going back to 1950. I love this. If you were to go back and remember, this looks very, very flat, even though it's really not. Big bear market there, big bear market there, big bear market there, bear market there, bear market there, bear market there. Let me ask you a question. If you go back in time and pick six points to buy and you said you can only buy six times in your lifetime, when would you have bought? You'd have bought at those paces. Let me ask you another question. When was fear the most? Can I give you a hint? The same spots. Guys, when we're trapped in that fear, we're sitting there and we're seeing our stocks go down. We're opening our accounts. This is what I don't like about bull markets. It gets people used to looking at their accounts every single day, every single day. It's funny, I heard somebody say, oh, I'm very disciplined. I only look at my accounts once a week, too much. You know what I do, guys? When I have to go into my accounts to do some paperwork or something for my bank, I take my hand and cover my balance. Because when stocks are up a ton, I don't want to get excited thinking to myself, I'm up a lot of money. And if stocks are down, I don't want to get upset about it. I do the things that sit there and say, Paul, you're still a human being, even though you have the ability to sit there and see stocks fall and be okay with it. In fact, I get excited about it. I still cover it up. Dalton, my in-house analyst, he covers it up with a sticky note. He literally knows exactly where his balance is going to be in his account. He puts a sticky note up and he opens his account. And guess what? Dalton kills it. That guy's done very, very well. Analyzed over 30% returns in the last three or four years. And he still doesn't want to see it. He doesn't want to get stuck in the emotion. This is where you want to be buying when fear is at its most. When everybody's sitting there saying, oh, what you don't get though, Paul is blah, blah, blah, blah, blah. And we will get there at some point. Remember electric vehicles? That was changing the world. Paul, you don't get it. EVs changing the world. How many still exist that we're talking about? Cannabis. That was a big thing. Real estate was a big thing. Tech stocks. And guys look at the story. The stories were all great and all accurate. Electric vehicles did change the world. The internet changed the world. Guess what? 98% of internet companies back in 2000 went to zero. I'm not talking about publicly traded ones only. The traded ones. Guys, Amazon went from $113 a share down to six during the bear market of 2000. And in that time, Jeff Bezos is a very, very famous video where he goes, you know, our stock fell 95% and all of our internal metrics were saying we were a better and better company. The stock is not the company and the company is not the stock. And so as I watched the stock fall from 113 to six, I was also watching all of our internal business metrics, number of customers, profit per unit, you know, everything you can imagine, defects, et cetera. Every single thing about the business was getting better and fast. And so as the stock price was going the wrong way, everything inside the company was going the right way. Because I don't care about the stock price. I care that we're going to becoming a better company because the fourth tenant of our principle driven investing in the short run stocks are voting machine in the long run, they're weighing machine. He sat there and say, the weight and fundamentals of our business were getting better. The short run people were sitting there saying, Mr. Market said that the stock was crappy. If you take your values based on where the stock price is going, you're probably not going to do very well in investing. Luckily you have found this channel and guys timing the bottom, trying to sit there and find the exact bottom. It's not going to work. Trust me, I've been there. I've sat there and said, okay, valuations are high. Let me short. And I lost money shorting. Guess what? It doesn't work. What I care about now is, okay, can I pay a reasonable price for a company today that in the future as it grows and gets larger and larger and larger, I will see that value increase. The hard part is keeping the noise out because there's always a reason why stock is down a lot. I can give you two prime examples, but one that still applies when Nike was hitting $180 a share, it's all time high. We did videos on it. I said, ah, it's probably worth under a hundred for me. I'll start taking a look. Paul, you don't get it. Start. Nike will never be below a hundred. You're so dumb. And literally we got those remarks. You might sit there and say, oh, I'm exaggerating. I'm not don't look at our Nike videos back when it was over 150. Look at Nike now after being up 8% today, it's at 63 bucks. But you know what people are saying now, Paul, Nike is woke. They're terrible. Nobody buys Nike's anymore. I'm like, really? Nobody buys Nike's anymore. I'm like, man, that's pretty interesting because I'm looking at Nike shoes and all these things and people are paying for the nose to have them. And I'm going to sit here and let's actually analyze this company to sit there and show you what I mean by this. So guys, we have a story and we have the numbers. Our goal with our stock analyzer tool puts those together. We sit there and look at the future and say, okay, what's the future going to look like? Well, we don't know. So I pick a low, middle and high range. I put those numbers in there when it comes to revenue growth, profit margin, earnings, multiple in the future and a desired return. Let's see what I did in the past for Nike. That way we can sit there and apply this exact thing. I put three, five and 7% revenue growth for Nike over the next 10 years. Now, lately, it's not been that. And a lot of people would say who get reactive recent events and it's called recency bias would say, well, Nike's revenue is down year over year, therefore it's going to continue. Maybe that could happen, but what kind of world do we live in where 10 years from now Nike doesn't exist? I don't mean that to say like what a terrible world. I mean like what would have to happen that Nike would go to zero? My guess is there'd be fraud involved or the world just went to shit. And therefore you shouldn't even, you're not gonna even own any stocks anyhow. And therefore you should just buy stocks on the way down. So I did three, five and 7% revenue growth profit margin. I did seven, eight and nine guys. Look at their history. They basically did 10% or more for a big chunk of their last 10 years. Now what PE would I apply to Nike 10 years from now? Well, it's a premium company. I think it has a moat. If you asked a hundred people, the number one sports brand apparel out there, I think a lot of them would say Nike and there's high returns on capital and they're increasing. This means basically the higher it is, the better the moat is. And they get a good return on the money invested in business. And then finally, what is my desired return? Now guys, my 9% number is to basically say, Hey, if you want to match the market, but remember we can't mismatch the market. When you buy individual stocks, you have to have a margin of safety because the future is unknown and you're a human. You're going to make mistakes just like I do. We all make mistakes, but the bigger our margin of safety, the better. Now, before I hit this analyze button, I want you to remember the stock's currently at 63. It was at 180 several years ago. And people thought we were crazy for thinking it was going to blow a hundred. I have a low price of 37, high price of 80, middle price of 55. Now I put in very, very conservative assumptions above. I put in 8% profit margins, which is 20% lower, 20% lower than they've been doing, actually 25% lower than they've been doing. I don't believe this is a $55 stock. In fact, I've been buying it below 75 because I think it's a little too crazy in terms of how low it's gotten and these low assumptions. But do you see my point? At 180, it couldn't miss. Now at 63, people are saying it's crazy. I don't agree with that. Now, if you like Nike, here's what you do. You might sit there and say, I want to buy Nike right now. There is a way to buy Nike at a lower price than 63 and make 10 to 15% return on your cash while you're doing it. It's called cash secured puts. I've done it. A lot of great investors do it. In fact, Warren Buffett did it back in the late eighties to buy Coca-Cola stock. He wanted to buy 5 million shares and he got paid seven and a half million bucks over one month to buy those 5 million shares. And when he got them, he still kept the seven and a half million and he got the stock at a lower price. This is not some snake oil salesman. This actually does happen. And I use it every single month. And I also, when I own the stock, rent it out to other people and sell covered calls. This is my way of making money on the stocks I own and the cash I have. So instead of making 4% in treasuries, I can go make that 10 or 15%. And the best part is waiting for stocks to fall to lower prices. If that sounds interesting to you, we have a great class for you. If you're currently an EM member and you belong to our community, you just have a few days left to get this class at nine 97 in the future. After that, that, that goes away. It'll be 1497 for EM members. It'll be 1997 people who don't belong to the software. So if you want to get it for 1497, join the software, sign up for a year, guys, this is called the freedom accelerator. It's absolutely changing the way in which people look at money. It changed the way in which I look at my investments. And it also allowed me to be calmer about my investments. I got paid to wait for the stock to fall to lower prices. And guys, I've been doing this for five years. And I remember the first time it was told to me, I was like, wait a second, you're telling me I can buy a stock I want at a lower price and I can make money along the way. And then when I have it, I can go basically rent it out and get income. I was like, okay, this is obviously some BS. So I called the most conservative investor. I know my friend, Gary, I've talked about him on this channel. I said, Gary, somebody pitched this idea of selling cash secured puts and covered calls, blah, blah. He said, Paul, absolutely. You got to do it. I go, well, Gary, why don't you do it for your fund? He goes, well, I'm not allowed to in my fund. The fund does not allow for these kinds of things. That's like, oh, okay. I didn't realize that. But I said, this is a good idea. He's like, absolutely. You're crazy not to do it. And I was like, okay. So I've been doing it for 60 months. I've had three down months, but the biggest thing about that isn't just the money you're making. It's me knowing that I can sit on cash and buy companies I want at lower prices and generate that 10 or 15% return. I'm going to walk you all the way through that. Learn the mistakes I made along the way. I've taught Mo, I've taught Dalton and they have done very well for it. This is an absolute game changer. I cannot stress it enough. It is a great way. And it's so funny because I look at it going, anybody with like a $50,000 portfolio, you'll make that thousand, 2000 bucks back in a matter of six months or a year if you do it properly. And guess what? There are emotional ways that people get involved with this. So you've got to do it the right way, just like investing has to be done the right way. Now, before you make your next investing move, there is something I want you to see. I picked seven stocks, my own personal magnificent seven, and they're being in the market this year. And I believe they're positioned to keep winning over the next five or 10 years. Why? Because the next 10 years, I don't believe will look anything like the last 10. The high fires that let us up will probably not lead us through what's coming. In the next video, I'm going to walk you through all 70 stocks and exactly why they're built for the storm that could be ahead. So click the video linked on the screen and I'll see you in the next video.