US Recession is Here? What I Am Buying!

Summary

In this video, Adam Coup shares his value investing strategies, focusing on recession-resistant businesses that offer long-term growth. He discusses investing in companies like S&P Global, cybersecurity firms, and healthcare providers, emphasizing the importance of understanding intrinsic value over stock price fluctuations. Adam advises using patience and discipline when buying stocks, waiting for undervalued opportunities during market sell-offs. He also promotes his educational courses and tools, such as his 'stock oracle,' aimed at helping investors make informed decisions based on company fundamentals rather than market sentiment.

Takeaways

• 😀 Understand the difference between the business and its stock price – the business might be strong even if the stock price is temporarily low.
• 😀 Recessions don’t necessarily affect resilient businesses. Companies with recurring income and strong fundamentals often continue to perform well.
• 😀 When stock prices drop due to market sentiment or manipulation, use it as an opportunity to buy undervalued stocks of strong businesses.
• 😀 S&P Global is considered recession-proof, and buying more shares when its price dropped allowed for leveraging short-term market mispricing.
• 😀 Cybersecurity companies like Fortinet remain essential even in recessions, as businesses need protection from hacking and other threats.
• 😀 HCA, a private hospital chain, is also recession-proof, with steady revenue and profits even during economic downturns.
• 😀 Intrinsic value analysis is crucial. For instance, stocks like S&P Global or Fortinet may reach overvaluation at times, making it important to wait for a better price.
• 😀 Invest in industries that provide essential services or products, such as healthcare and cybersecurity, to ensure stability during market volatility.
• 😀 Companies with recurring subscription models or strong customer retention, like cybersecurity firms, are more likely to withstand economic challenges.
• 😀 Be disciplined with investments: buy when stocks are undervalued and wait for opportunities to buy quality companies during market sell-offs.
• 😀 Market fluctuations are normal, and savvy investors use periods of panic or downturns as an opportunity to build resilient portfolios for the long term.

Q & A

What is the key difference between business performance and stock price?

The key difference is that the business itself may be performing well even during a recession, while stock prices can be influenced by market sentiment, manipulation, and news. The stock price does not always reflect the true value of the company.

Why did the speaker buy more shares of S&P Global a few weeks ago?

The speaker bought more shares of S&P Global when its price dropped because the company is considered recession-proof and the price was undervalued, offering a good opportunity to purchase more shares at a lower price.

What is meant by 'intrinsic value' in stock investing?

Intrinsic value refers to the true, underlying value of a company or stock, based on its fundamentals such as earnings, growth prospects, and other financial metrics. It is used to determine whether a stock is overvalued or undervalued compared to its current market price.

Why does the speaker consider cybersecurity companies like Fortinet to be recession-proof?

Cybersecurity services are essential for protecting businesses, and the demand for these services remains constant, even during recessions. As a result, companies like Fortinet are considered recession-proof because they offer critical services that businesses cannot afford to cancel.

How did Fortinet perform during the 2020 recession?

During the 2020 recession, Fortinet's revenue and profits still increased, demonstrating the company's resilience and the continued demand for cybersecurity services even during economic downturns.

What does the speaker mean when they say 'market manipulation and market mispricing'?

Market manipulation refers to actions that can artificially influence stock prices, while market mispricing refers to instances when a stock's price does not accurately reflect its true value, whether it is overvalued or undervalued.

Why does the speaker mention HCA Healthcare as a recession-proof company?

HCA Healthcare, a major private hospital chain in the U.S., is considered recession-proof because people will always need healthcare, regardless of economic conditions. Healthcare services are essential, and demand for them does not decrease in recessions.

What does the speaker recommend doing when a stock is overvalued?

When a stock is overvalued, the speaker recommends waiting for the stock to become undervalued again before considering buying more shares. Patience and discipline are key to building a resilient investment portfolio.

Why is recurring income important for recession-proof companies?

Recurring income is important because it provides consistent cash flow, which helps companies maintain stability even during tough economic times. Companies with recurring income models, such as subscriptions, are more resilient to market fluctuations.

What is the significance of AI in the speaker's investment strategy?

AI is seen as a key factor driving the growth of technology companies. The speaker highlights IT and technology companies that stand to benefit from the AI revolution, viewing them as undervalued opportunities for long-term investment growth.