How To Buy The Dip

1

Warren Buffet once said, “you only learn who has been swimming naked when the tide goes out”—except right now the tide is going out and pretty much everybody is getting hammered:

And sure, some companies have lost more value than others, but do you really think the list below is a rank ordering of the long-term potential of these companies, best to worst?

Are the companies at the top obviously going to generate superior long-run returns to the companies at the bottom? I think not. I think there are probably a couple generational companies towards the bottom, and some real stinkers towards the top.

So maybe when the tide goes out you don’t actually get to see who has their swimming trunks on. Maybe the only way to know for sure is to wait it out and see who stands the test of time. But that doesn’t help us make investing decisions today.

What does? Understanding how market power works, and who has it.

2

If you’re thinking about investing in a stock that is going down, you’d better understand why before you buy. Is it because the company is losing power? Or is there something else going on? 

Across the board, tech stocks are down right now, and there are two dominant narratives to explain it: