“You have to be willing to
take the body blows and
the PUNCHES to the gut to
earn the returns that stocks offer.”
NEWSWEEK.COM 39
“buy on the dips” is a popular
strategy on Wall Street—snapping up
shares when a drop in the market es-
sentially puts them on sale. But while
stocks are certainly less expensive
than they were a month ago, they’re
not exactly cheap yet, coming off a
bull market run-up in prices that
lasted more than a decade. And if
the market keeps tumbling, you prob-
ably won’t feel so good about a “bar-
gain” that continues to fall in value.
Also, if you’re putting money away
regularly in a 401(k) or similar re-
tirement savings plan at work, you’re
already buying on the dips; the same
number of dollars gets you more
shares now than it did in January and
February. That’s probably all the dip-
ping you need.
As for profiting from the coronavirus
scare directly, some Wall Streeters have
been all over that, driving up shares ofselect health care companies and phar-
maceutical outfits working on a vaccine,
even as the rest of the market fell. Com-
panies that make sanitizing products, fa-
cilitate working from home or provide
certain at-home services have also done
relatively well, either rising in price or
falling less than the average stock.
Investment company MKM Part-
ners in Stamford, Connecticut, even
created what it calls a “Stay at Home”
portfolio with suggestions of stocks itfeels “may hold up better in the face
of COVID-19.” Among the 33 compa-
nies on the list: video game developer
Activision Blizzard, recipe kit service
Blue Apron, cleaning products suppli-
er Clorox, food delivery service Grub-
hub, streaming service Netflix, home
exercise bike maker Peloton and video
conferencing provider Zoom Video
Communications. “We tried to identi-
fy what products/services/companies
would potentially benefit in a world of
quarantined individuals,” chief market
technician JC O’Hara said in an email
to Newsweek. “What would people do if
they were stuck inside all day?”
Sorry, but most of you should not be
“all over” that.
Whatever the merits of the strategy
or how these particular stocks ulti-
mately fare, buying individual stocks
and trying to capitalize on a trend
hasn’t proved to be a good strategy for
most investors. You’re typically better
off keeping things simple and investing
via index funds that track the perfor-
mance of the general market rather
than trying to beat it. Over the past 15
years, nearly 88 percent of fund man-
agers who actively picked stocks failed
to beat their benchmark index.DON’T VIEW THIS AS AN OPPORTUNITY
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