Why Buying Cheap Makes All the Difference in the World!
I’m a cheapskate. And no, I’m not afraid to admit it.
When I go grocery shopping, I bring along a plastic coupon holder and use as many clipped ones as I can. I also go online to Publix.com and “clip” the digital ones there every week.
When I buy new clothes, I try to hit up the local outlet mall rather than the regular one. The prices are better, and the quality is just fine. I increase my savings by doing things like signing up for email and text coupons — something that has saved me even more!
When it comes to investments, my approach is no different. If I can get a stock or ETF “on sale,” I love it. And if I can buy stocks at once-in-three-decade depressed valuations … when extreme pessimism is rampant in the mainstream media … and when investors are positioned the most egregiously negative on those stocks than they’ve ever been … I’m like a kid on Christmas morning!
That brings me to one of my favorite sectors on the planet right now: Energy. Yes, energy.
You see, everyone and his sister was puking up energy stocks late last year and earlier this year. You couldn’t give ’em away, with some plunging 60 percent, 70 percent, or more just since last summer!
Crude oil futures got the most oversold, and showed the most extreme downside momentum, ever — even worse than during the 2008-2009 implosion! Oil prices fell the most since the 1986 collapse driven by Saudi Arabia’s decision to flood the market with crude.
The result: Drilling rig activity in the U.S. and Canada collapsed at the fastest rate in history. Energy sector junk bonds plunged in price. Several smaller drillers tumbled into bankruptcy, or got very close to doing so. Predictions of a crisis on the order of the dot-com collapse or the housing market implosion grew widespread.
And you know what I did? I started recommending that my subscribers and my readers buy!
Was I off my rocker? I like to think not. Instead, I like to think it was a chance to grab some once-in-a-lifetime bargains!
Not $5 off a work shirt at Calvin Klein, which I got a while back from a text-based deal.
Not $50 off at Men’s Wearhouse, which I just enjoyed this past weekend as a reward for previous purchases for my stepson.
But an honest-to-goodness mega-discount, the kind you can’t even find on TV shows like Extreme Couponing!
Did I know then that oil prices had bottomed, 100 percent, for always and forever? Do I know that now, a few months of bottoming action later? Of course not!
But what I do know is that buying cheap, cheap, cheap makes all the difference in the world — whether at the grocery store or in the stock market! I hope you joined me in buying energy, and are reaping the benefits now.
After all, many energy stocks are now rallying to multi-month highs as investors anticipate better days ahead. Mega-giants like Royal Dutch Shell (RDS/A, Weiss Ratings: C) are making their biggest deals in more than a decade to take advantage of dirt-cheap valuations. And private equity buyers and corporate buyers are combing through the energy sector wreckage, presaging even more transactions down the road.
One last piece of advice: I don’t think this train has left the station. Not by a long shot. So even if you’ve missed the first leg of the move higher in energy stocks, there could be much, much more room to run if I’m right about where we’re headed! Be sure you watch this space for more guidance on this issue as 2015 unfolds.
Until next time,
Mike
