With events like the so-called Brexit driving prices down is it time to buy stocks? The Street thinks so and offers two blue chip tech stocks as suggestions.
Brexit is spooking the markets, putting these solid buy-and-hold forever companies on the discount shelf. Here is why investors should seize the opportunity and scoop them up.
The recent Brexit-related bedlam was a classic example of how fear can dominate rational thinking in the markets.
However, with this fear now taking a backseat, it is time to buy strong, yet still undervalued blue chips.
Here are two stocks that are must haves, and yet they are inexpensive.
The two stocks are Apple and Intel. They make the point that Apple trades at just 10.6 times forward looking earnings as opposed to Alphabet at 17 time, Amazon at 73 times, Facebook at 25 times and Netflix at 94 times. Apple is down 25% from a year ago and should be high on your list if you think that current global issues make it time to buy stocks. Intel pays a 3.18% dividend and is repositioning itself for a century of growth.
Technical Stock Analysis
There are times to buy stocks and there are precise times to buy stocks. Forbes takes aim at rival publication Barron’s in a critique of Barron’s top ten list.
The Barron’s “Top 10 For 2016” was published in the Dec. 7, 2015 edition its magazine. Here we are at mid-year and Electronic Arts is the only winner, up 10.2% so far in 2016 and up 7.1% just since Dec. 7. The biggest loser is Delta Airlines down 28.1% year to date and in bear market territory 31% below its 52-week high off $52.77 set on Dec. 17.
This portfolio was constructed based on the fundament methodologies used by Barron’s. It is clear to me that Barron’s did not look at technical charts when making these recommendations and they did not provide value levels and risky levels that provide guidance as to where to buy these stocks on weakness and where to sell on strength.
Over the long run fundamental analysis provides a sound basis for stock investing. However, profits are better when you buy on weakness and not just randomly. To the extent that technical stock analysis is in your playbook it is a good idea to consult it for guidance when it is time to buy stocks.
Dollar Cost Averaging
For the long term buy and hold investor it is always time to buy stocks. The approach is called Dollar Cost Averaging. You will pick one of more solid stocks and use the same amount of money each month to purchase shares. NASDAQ calls this a smart investment strategy.
By following a simple practice known as dollar cost averaging, you can protect yourself against market fluctuations and downside risk in the market. By buying a fixed dollar amount on a regular schedule, your focus is on accumulating assets on a regular basis, instead of trying to time the market.
When stocks are cheap you get more share for your money and when stocks are expensive you do not buy so heavily as if you purchased the same number of shares each month.
