Let’s Get Rich!
Posted by Wayne on October 26, 2008 – 3:41 amI’ve had just about enough of all the “gloom and doom” talk that’s been running rampant in today’s financial media.
Just look at the headlines from some of the major financial media sites:
“Fresh Tumult as Signs of Recession Go Global”
“How Detroit Drove Into a Ditch “
“Where Have All the Safe Stocks Gone?”
And the television networks are even worse. All the talking heads on CNBC are retards and they’re simply looking to cash in on people’s fears in order to keep driving advertising dollars. Forget these jokers!
Let’s focus on something important – better yet, someone important: my main man, Warren Buffett.
For the first time in a long time, Mr. Buffett has cracked open his personal trading account and started buying plain vanilla stocks again.
In his recent op-ed piece in the New York Times, Buffett flat out says,
“I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds.”
Not if that’s not an endorsement for picking your head up out of your pillow, wiping away the tears and beginning to look for bargains in the market, then I don’t know what is!
So this week, I’m going to do something you might consider insane. Something I can almost guarantee none of TickerHound’s competitors are doing…
I’m going to tell you the next stock I’m going to add to my personal portfolio this very week!
Obviously this stock could go down further, but given the price, financial performance and risk-reward ratio, I’m fairly comfortable stepping up to the plate and buying me some shares this week.
Dollar Tree (Nasdaq: DLTR)
I love this discount (dollar store) retailer that operates in 48 states with over 3,400 locations.
In tough times people are going to be forced to look for bargains out there. Going to the local convenience store might no longer be an option. Dollar stores are more than a viable alternative, for many families they’ll soon become an outright necessity.
Just check out how well this company performed during the last downturn! DLTR handily beat out the Dow by double digit percentage points during the 2001 – 2003 bear market. Given the fact that this economy looks to be much worse than it has been for a good long time, I think it’s fair to conclude that DLTR has a high probability of having a repeat performance.
The potential risk here is that folks curtail all nonessential spending and Dollar Tree takes a hit in sales. But even if that were the case, then companies like this one would the first to turn around when consumer spending does pick back up again.
You might notice that the stock has dropped off with the market over the last few months, but not nearly by the same amount as the Dow. Year to date the stock is up almost 30% while the rest of the market is down by nearly 40%.
To me this says we have a company that’s in a fantastic competitive position and will continue to outperform the market. And at a P/E of 15, I’m going to feel pretty comfortable taking a position in the stock this week!
Keep Your Head Up!
So there you have it – it might sound crazy, but it’s the truth. The US economy is not going out of business, the stock market is not going to zero and one day you’ll probably wake up and kick yourself for not buying great companies while they were cheap.
Lucky for us this economy hasn’t bottomed out yet and we’ll still have plenty of opportunities to buy stocks at fire-sale prices!
I hope you have a great week and please, do your best to ignore the media right now.
