In Focus: Buy The Pullback in These Stocks
Updated: Apr 4
At the start of every pull back there are the calls to buy the pullback and there are those mocking the calls to buy the pullback. Hopefully, you've been investing long enough to understand that those mocking the calls to buy the pull back have no idea what they're doing. If you're relatively new to investing allow me to explain why you should always be looking to buy the pullbacks.
I have an exercise that I tell people to do in order to convince them to start investing. I ask them to pull up a chart of the Dow Jones Industrial Average. I then tell them to mark the chart on the year they were born with a 1, and then to mark where we are now with a 2. It's no surprise, the 2 is always in a higher position than the 1.
If the chart allows them, I tell them to zoom in and really follow the path of the Dow Jones Industrial Average from the year of their birth until the present. I tell them to note the dips and pull backs. I explain to them that in those moments of dips and pullbacks the financial markets felt like they were in collapse, but we still made it to point 2, which is much higher than point 1.
Markets and stocks pullback, it’s just the way it goes. The smart money sees a sale when the markets pull back, as they can now buy what was a $50 billion company for $35 billion. The dumb money, they mock the "buy the pullback sentiment" for whatever their reasons are.
Recently there have been a few pullbacks in some very noticeable names, and some not so noticeable names. For investors that missed out or were waiting for an opportunity to add to their positions, the pull back in some of these names have created an investment opportunity.
Big Name Pullbacks
Tesla (TSLA) and Twitter (TWTR) are two stocks that have popped up on my radar. I've spent the last two weeks of this blog discussing both of the companies. Tesla is down 29% since its $883.09 per share close on January 26, 2021. Twitter traded to a high of $80.75 on February 25, 2021, and it's been in a slide ever since. Twitter share's are down 24% since hitting $80.75.
Many have given their reasons as to why Tesla has been in a slide. CNN believes it has to do with Bitcoin, increased competition, and that the stock was initially overbought. A CNBC article points to the market’s worry over increased interest rates.
Twitter's selloff has been a little more difficult to pin down. The stock sold off following the company's ban on former President Donald Trump and bottomed at $45.93 per share, but then the stock rallied and eventually traded to the $80 mark I noted earlier. Twitter’s CEO, along with other big tech CEOs took a grilling from regulators last week. The selloff in Twitt