The pace of the selling has slowed, and we have seen some rally days this week.
There is some hope that the COVID-19 pandemic is slowing, and we see the world to get back to some version of normal in the next month or so.
Still, you need to be prepared in case the selling breaks out again as we should see a horror show of an earnings season unfold throughout the month.
The news flow is going to make it tough for even the most passionate bull to buy with abandon.
But if you can stay ready, disciplined, and laser-focused, downturns like the one we’re experiencing can create buying opportunities that you won’t see again.
Today I’m going to highlight three of them…
Sweeter the Second Time Around
We need to be prepared to be buyers of the stocks we never thought we would get another chance at owning.
At the top of my list is Berkshire Hathaway Class B (NYSE:BRK.B) shares.
The stock has pulled back about 20% so far this year, and any further declines have to be treated as a buying opportunity.
Warren Buffett is sitting on a cash pile of more than $125 billion to put to work as prices decline.
Buffett recently said that “Just like being a net buyer of food, I expect to buy food the rest of my life, and I hope that food goes down in price tomorrow. When stocks go down, we’re going to be buying on balance.”
Further declines would give him a chance to put that cash to work and prices that should lean to huge gains going forward.
Not only do you own a piece of the portfolio of publicly traded stocks that Berkshire owns that includes best-in-class companies like Coca-Cola Co. (NYSE:KO), Visa Inc. (NYSE:V) and Apple Inc. (Nasdaq:AAPL). The operating businesses owned by the conglomerate include some of the greatest companies in the world like Geico, Berkshire Hathaway Energy, and Burlington Northern Santa Fe.
When the economy is back on track, I fully expect to see the price of Berkshire Hathaway recover and go on to new all-time highs.
A World-Class Fund at a Steep Discount
You can also buy into Pershing Square Holdings Ltd. (OTC:PSHZF) managed by Bill Ackman.
Mr. Ackman came in the coronavirus sell-off with hedges in place that netted more than $2 billion for the fund.
He has been busy deploying the cash, buying beaten-down stocks like Hilton Worldwide Holdings Inc. (NYSE:HLT) and Starbucks at bargain prices.
Mr. Ackman has become active on Twitter Inc. (NYSE:TWTR) of late, recently tweeting that he thinks things are going to better than expected.
He wrote, “Massive stimulus is being injected globally to backfill the economy and bridge us through the crisis. Most corporations, banks, and consumers entered the crisis reasonably well capitalized. Rates are extremely low. There is no housing or commercial real estate overhang.”
The fund is listed in London but can be purchased over-the-counter (OTC) at a steep discount to the net asset value.
The NAV at the end of March was $27.72, and the shares currently trade at just $18.35 in the U.S. over-the-counter markets, Pershing Square has been buying back its stock because of the deeply discounted valuation, and we should be buying right along with them.
There’s No Place Like HOMB
You should also be buying Home Bancshares Inc. (NasdaqGS:HOMB) right now.
If it falls further, buy more.
John Allison is one of the smartest businessmen I have ever had the pleasure of meeting, and he has built the best team in the banking industry, in my opinion.
He has taken this bank from a one branch bank with $25 million in assets to a regional powerhouse with over $15 billion in total assets in just 21 years.
The growth has been organic as well as by acquisition as they average about one deal a year.
Mr. Allison and his team look to buy underperforming banks cut costs and raise the return on those assets to the high levels earned by his bank, and he has made a lot of money doing accretive deals for his shareholders.
Once we get to the other side of this, the price of Home Bancshares should rise rapidly.
It’s a scary time, but there are some signs we are getting closer to the end of this crisis.
It has not been pleasant, and all of us have seen our portfolios drop somewhat over the past couple of months.
Review your portfolio carefully.
If you don’t love it, sell it and look to deploy the cash into the stocks that should have massive returns over the next few years.
To the Max
— Tim Melvin
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Source: Max Wealth