News Flash: The stock market doesn't go straight up!
We often encounter a bunch of pullbacks, retracements, walking to the edge and threatening to jump off the cliff. We forget all about that because we’re turning into participation trophy investors. This market has rewarded the weak hands that limped in and amateurs who took their hairdresser’s advice and bought Apple AAPL stock.
We get it — Monday was an exceptionally chaotic/dramatic day for stocks. In just a few minutes after the opening bell, the Dow nosedived 1,089 points — the maximum loss ever witnessed during a single trading day, even exceeding the Flash Crash of 2010.
The Dow lost 588 points before closing, the worst since Aug 2011.
For the second week now, stock markets across the world are in a panic due to concerns regarding China's economic slowdown. The wave of selling pushed the S&P 500 into correction for the first time since 2011, and pushed the Dow to close at an 18-month low.
In fact, stock prices for a number of iconic American Blue Chip companies (that are known to have survived quite a few challenges and market cycles) witnessed significant difference between the day’s high and low.
Some of them include —
|
Blue Chip Company |
High |
Low |
Percentage |
|
General Electric Company GE |
24.04 |
19.37 |
24.1% |
|
Verizon Communications Inc. VZ |
45.87 |
38.06 |
20.5% |
|
The Home Depot, Inc. HD |
115.88 |
92.17 |
25.7% |
|
JPMorgan Chase & Co. JPM |
62.92 |
50.07 |
25.7% |
|
Ford Motor Co. F |
13.48 |
10.44 |
29.12% |
Most of the investors know that Blue Chip stocks have steady earnings. During an economic slump, investors may take refuge in them as they are secure. Blue Chip companies provide security during phases of sluggish growth backed by their capable management teams and ability to generate consistent profits.
If these companies face such volatility, you might think that this is the end of the world and even hear the Four Horsemen of the Apocalypse galloping down Wall Street.
Guess what? It is not as bad as people are making it out to be.
It was not “Black Monday.” It was “Green Monday” — there were deals to be had across the board. Stick to the basics and look for stocks with solid earnings stories that are still showing some strength relative to the rest of this market. How about a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) Blue Chip stock? That gives us four solid ideas right here (with two from the table above!).
The Home Depot, Inc. and Ford Motor Co. did not have a good day yesterday. Agreed. But it was just one of those days for these stocks. So go buy them when they are on sale! Home Depot and Ford have a Zacks Rank #2, Amazon.com Inc. AMZN and Toyota Motor Corporation TM sport a Zacks Rank #1.
Bottom Line
Days like this are when money is minted on the market. You can't flee from a market like this. So march ahead and scoop up strong stocks that will sail through this volatility. Don't be emotional, instead be a smart investor and fortunes will find their way into your portfolio. This is your time to shine and our choice of stocks is your trump card.
Test your mettle, forge your fortitude in the blazing market panic. That's what separates the Pitt from the Poodles, platinum from white gold, women and men from wimps and mice. THIS…IS…WALL…STREET!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment