We like to buy publicly traded equities when they are on sale. For our clients with a high risk tolerance and a long term horizon, we encourage them to buy more equities during steep market declines. There are often moments in history when the markets trade at ridiculously attractive levels because of events such as the Global Financial Crisis, post Tech Bubble and the Pandemic. These are times when the natural instinct for some is to sell equities, however we encourage our clients to buy equities with funds designated for long term needs. The reason we do this is because we know if clients can buy equities at lower valuations, the odds are their long term returns will be attractive.
Once, I recommended a counterintuitive investment move to a client that turned out quite well. It was during a period when tech stocks were everyone's favorite, and most portfolios were heavily weighted in that sector. Seeing an overvaluation in tech, I suggested we pivot to utilities—a sector often overlooked due to its slow growth. My client was skeptical, given the hype around tech's rapid gains. I explained that utilities are stable, offer consistent dividends, and perform well during market volatility. Reluctantly, the client agreed to reallocate a portion of their investment. Just a few months later, the tech bubble experienced a significant correction. As a result, the utility stocks not only held their value but also provided steady dividends. This move protected the client’s portfolio from larger losses and highlighted the importance of diversification. In the end, the client was pleased with the decision, appreciating the foresight in an unconventional strategy.
I suggested a client make a counterintuitive investment move by investing in an undervalued stock. It goes against the usual belief of buying high and selling low, as most investors shy away from stocks trading at lower prices. After conducting thorough research and analysis, I discovered that the company's fundamentals were strong and their stock price did not accurately reflect its true value. Despite the initial hesitation from my client, who was concerned about taking on additional risk, they ultimately decided to follow my recommendation. As predicted, the stock eventually rose significantly in value, resulting in a substantial return on their investment. This counterintuitive move of investing in an undervalued stock not only paid off for my client, but it also highlighted the importance of looking beyond surface-level information and conducting thorough analysis before making investment decisions. My experience with this particular client further reinforced the notion that thorough analysis can often lead to successful investments, even if they may seem counterintuitive at first glance. It is essential to consider both quantitative and qualitative factors when evaluating potential investments, rather than solely relying on market trends or popular opinions.