We are living in very strange times indeed. And this statement applies to virtually every aspect of our daily lives. The stock market is no exception. Although I am constantly reminding anyone who will listen that it is a market of stocks rather than a stock market, today’s bifurcation might be the most unusual divide that I have ever seen or experienced.
Despite the pandemic that we are all suffering under and despite the economic stress that it has brought, we have what I would only describe as a schizophrenic stock market. On the one hand, we have stocks that are trading at unrealistic nosebleed valuations that are not even remotely supported by fundamental values. On the other hand, we have a significant number of stocks – and even entire industry groups – being priced at insanely low valuations.
As a result, the prudent long-term investor is faced with both great future opportunity and disaster at the same time. From my perspective, never before has it been more important to choose the right companies (stocks) to invest in. But unfortunately, the challenge of picking the right stocks is often counterintuitive to what is happening in the short run. History has taught us over and over again, expensive stocks tend to perform poorly in the long run and inexpensive stocks tend to provide higher returns with less risk. As the old adage teaches us, those who fail to learn the hard lessons of history are doomed to repeat them.
Nevertheless, with human nature being what it is, it is hard for us to avoid the hot and popular stocks that are going up every day and easy for us to avoid investing in the quality companies that are becoming true bargains. To most people, a stock that is rising is automatically a good stock, while a stock price that is falling is automatically a bad stock often referred to as a dog.
In closing, we only need to look back a few short decades to examine and experience the hard lessons of overvaluation and simultaneously the extreme opportunity of undervaluation. In the late ‘90s through 2000 we had what was referred to as the irrational exuberant period coupled with the tech bubble. The latter resulted in one of the most expensive market values of any group of stocks in recorded history.
For those of you who do not remember, these exuberant valuations led to what many called the lost decade. Which of course was a long period of time where investors, even those investing in the best-of-breed stocks on the planet made zero money for the better part of a decade. Most importantly, the loss of any return for a decade – although tragic – pales in comparison to the loss of time. Money can always be made back, but even one second of time lost can never be recovered let alone an entire decade.
The moral of this story is that FAST Graphs have never been more important or valuable than they are today. The fundamentals analyzer software tool reveals valuation like no other. Although this is not a market timing tool, which makes sense because none ever has nor ever will exist, FAST Graphs empower investors to not only make sound and prudent long-term investing decisions, they simultaneously reveal both risk and opportunity.
FAST Graph Analyze Out Loud Video
With this video, Co-Founder Chuck Carnevale will clearly illustrate why FAST Graphs are so important today, and how they can be utilized to your long-term advantage and financial success.