Buy Fear, Sell Greed: A 'Dirty Dozen' of Bargain Stocks to Play With

 | Apr 05, 2018 | 2:00 PM EDT
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Stock quotes in this article:

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nclh

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ayi

We all feel similar emotions when you see the futures down big overnight.

How bad will that affect our portfolio values? Will the selloff turn into something even worse? Is this the prelude to "another 2008"? Of course we get fearful.

The best investors, though, fight those very normal emotions and force themselves to act rationally. Our own Helene Meisler, who publishes Top Stocks, put out a chart a couple of days ago showing we were already nearing extremely oversold levels. I added an SPY chart of that same time frame to prove that those were universally great times to have been buying, not selling.

CNN's Fear and Greed indicator has been a fabulous contrary indicator as well. Accumulating stocks when traders were most nervous has been a license to print money for anyone with a reasonable time horizon.

The trade war issues dominating today's discussions will end up being resolved with much less disruption than is feared. It is in no country's best interest to raise the price of goods which its citizens need to buy.

America represents the world's largest consumer of other countries' goods. No other places will be willing to give up selling to us. I suspect there will be favorable new treaties which end up better than the ones now in effect.

The vast majority of domestic companies will be unaffected by these factor regardless. Here is a nice list to research if you are looking for bargains to put money to work. Each is well off its 52-week high. Many pay generous dividends. All sport healthy balance sheets and generate solid profits.

Print out this list and check it again a year from now. I'm willing to bet the overall total return performance will be outstanding for those that own equal weightings of all twelve stocks. I own shares, and am short put options, of all the companies listed.

Tractor Supply (TSCO) and Norwegian Cruise Line Holdings (NCLH) are my two largest dollar positions. I just established a long position in Acuity Brands (AYI) this morning (April 4) after it tanked on slightly disappointing earnings.

Never be scared to buy good quality stocks simply because they are plunging. The mood can change quickly and any bad news is often more than fully priced in.

When almost 100% all stocks are moving down due to market conditions you can be sure that the vast majority of them had no company specific news at all. You are just being presented with a sale price on merchandise which others were recently willing to pay much more to buy.

This commentary originally appeared on our sister site Real Money Pro. Click here to learn about this dynamic market information service for active traders and to receive daily columns from Paul Price, Bret Jensen and others.

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