Trade Like Buffett in Times of Panic
Panic has returned to the market – again.
After hitting all-time highs, the major indices are slipping on inflationary concerns, fears of recession, aggressive rate hikes, war in Ukraine, you name it. As a result, investors are panicked. They’re selling everything. But that’s the last thing you want to do. Instead, follow these rules.
Have Cash on Hand
Some people think it’s bad to have cash laying around, as an “unproductive asset that acts as a drag on such markers as return on equity,” according to Warren Buffett.
However, “Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent,” he says.
Don’t Follow the Herd
One of the key reasons that many investors underperform in the market is because they move in and out of assets at the wrong time. When an investor sees everyone else making money from rising markets, that’s when they tend to throw every spare dollar into their investments. Unfortunately, when that same investor sees a group of other investors selling, the investor sells, too.
In short, they get caught up in herd mentality.
A trader will often mimic the actions of a larger group so they don’t feel left out of a trend, or miss what the herd believes is a “can’t lose” trade.
The rationale is simple.
It’s unlikely that such a large group of people can be so wrong. But oftentimes, they are.
Be in a Strong Position to Capitalize
With cash on hand, Buffett has the financial flexibility to jump on opportunities that popped up. As the billionaire often points out, keeping some cash on hand allows you to take advantage of corrections without having to sell other investments.
I’m sure you’ve heard of the metaverse.
Or, as Meta Platforms’ Mark Zuckerberg puts it, the metaverse is “a sci-fi concept whereby humans put on some sort of headset or smart glasses that allows them to live, work and play in a virtual world much like the one depicted in the ‘Ready Player One’ movie,” as noted by CNBC.
Multi-billion-dollar companies are racing for a piece of the virtual world. Celebrities are even buying metaverse real estate, including Paris Hilton and Snoop Dogg. Nike just filed for new trademarks to design and sell virtual sneakers in the metaverse. CVS Corp. wants to sell virtual goods. Walmart just filed for new trademarks to sell virtual goods in the metaverse, too.
Better, according to analysts at Emergen Research, the metaverse market could be worth up to $828.95 billion by 2028. Even analysts at Bloomberg Intelligence says it could reach $800 billion by 2024. In short, we could be looking at a massive game-changing market here.
One way to trade the potential is with an ETF, such as the Global X Metaverse ETF (VR).
Insider Buying: Camping World Holdings (CWH)
Director Kent Schickli recently bought 10,000 shares of the beaten down stock for $284,000. At the moment, the stock is sitting a support dating back to early 2021.
The company also just announced it is acquiring Richardson’s RV Centers. As noted in a recent press release, “The Richardson’s RV Centers acquisition is the largest acquisition in company history and strengthens Camping World’s position as the Number 1 RV dealer in California. The agreement includes eight locations in California and Indiana: five current dealership locations, one future dealership location, and two parts and service centers.”