From Crisis to "Change Point": Learn how you can create MASSIVE opportunities in the stock market!
We’re excited to share with you an important insight about investing. In these articles, we talk about such topics because our aim is to help you achieve financial stability in the long run. Today, our topic will be related to adapting to changes in the financial sector. Keep reading below to know how you can make an awesome opportunity out of a market crisis.
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From Crisis to "Change Point": Learn how you can create MASSIVE opportunities in the stock market! The Great Recession of 2008 to 2009 was the worst economic downturn in the U.S. since the Great Depression. At that time, everyone was panicking about the economy… except Valens Research’s Chairman and CEO, Professor Joel Litman, and the firm’s Director of Research, Rob Spivey. During the crisis, some wondered if the economy would ever recover. They thought it was the end of the market and stocks couldn’t bounce back again. In the middle of all that, Professor Litman left a very successful job at Credit Suisse. Spivey also left his very successful job at a hedge fund. Both saw that the market had entered rough seas. So, the next thing they did? They dove in headfirst! … but wait. Professor Litman and Spivey had a very good reason for doing that…
Making an Opportunity Out of a Market Crisis In 2009, there was a lack of quality investment research to paint the way for Wall Street. Professor Litman and Spivey both knew they could fill that void. Thus, Valens Research—the institutional arm of Altimetry Financial Research—was born. According to Spivey, Wall Street was totally upended by the financial crisis in 2009. However, he and Professor Litman were bullish about the state of the economy. Their macroeconomic data showed that as the market reached its point of maximum pessimism, investors should be buying. So, Professor Litman and Spivey instructed their investor clients to buy as many stocks as they could. They recommended industrial cooking supplier Middleby (MIDD). Within five years, the stock had soared more than 1,000%. Likewise, apparel maker V.F. Corporation (VFC) was dirt-cheap in 2009. By 2014, the stock had more than quadrupled. The same was true early in the COVID-19 pandemic in 2020. Just a week or two after the U.S. shut down, investors were tripping over themselves to get out of stocks. Again, Professor Litman and Spivey saw a MASSIVE opportunity. How so? That time, corporate balance sheets were strong. The U.S. was stepping in to support businesses and individuals with stimulus. So, Professor Litman and Spivey started to look for the kinds of companies that would do best in such a new environment. They compiled a list of “At-Home Revolution” opportunities—stocks that would benefit as people found new ways to work, learn, and entertain themselves at home. Professor Litman and Spivey also recommended companies like speaker maker Sonos (SONO) and at-home health business Teladoc Health (TDOC) in Altimetry’s “High Alpha” advisory. Within about a year, those who followed their advice booked gains of 211% and 87%, respectively. So, what’s the bottom line here? Had Professor Litman and Spivey been busy focusing on the negative in such crises, they never would have found these stock “winners.” The key was to reframe the pandemic as a “change point,” and to look for new opportunities created by the crisis. Until now, stocks are still chugging along… but considering the data Professor Litman and Spivey are seeing from the credit market, they don’t expect that to last forever. Sooner or later, the market will come crashing down. Many investors will panic. However, those who have been preparing will see a MASSIVE, compelling opportunity. Hope you’ve found this week’s insights interesting and helpful. High interest rates and fear around debt have played a big part in spooking investors. Learn more about this business case study’s investing and stock market woes in next week’s article! |
