Hi partner! 👋🏻
The market has fallen after a storm of “bad news” and new narratives in recent weeks.
US Technology dominance—The market is skeptical about the U.S. technology advantage following Deepseek and Alibaba’s AI models. are found to be competitive with the US AI at a fraction of the cost. This has sent the magnificent 7 down.
Increased CapEx—Fears of increased capital expenditure spending to capitalize on the AI opportunity. Although this is likely to be good investments in the long-term, Wall Street is scared of the short-term consequences.
Reduced trade—Trump and the US have imposed tariffs on multiple trading partners. This has created uncertainty for businesses with international business units, and US businesses will likely be hesitant to invest in 2025 before they have more certainty from the US leadership.
Geopolitical tensions—war in Europe is now normalized, but the US is making aggressive remarks to Canada and Greenland, creating more tensions from a geopolitical standpoint.
Recession fears—tariffs are ultimately a tax on the US consumer. They will have to pay the check of increased costs for US businesses that now have to make their product in the US (Higher costs = higher prices to consumers). This might lead to lower consumer spending, which is ~70% of the economy.
This storm of bad news and global tensions has naturally made the stock market uneasy, we’ve seen a sharp drop in the S&P500:
Of course, if you zoom out, this is nothing special, at least not yet:
The mindset to adopt for long-term investors:
“Never let a good crisis go to waste”
More uncertainty means more volatility, more volatility means more opportunities for long-term investors.
You don’t make great buying decisions when everyone is optimistic, you make them when there is fear and panic in the market.
Keep a balanced perspective
The nature of the market makes it emotional and reactive to news and narratives (Especially when it means uncertainty).
Corrections and market declines are common, it happens all the time.
The bottom line is that the market, over a long time period, will keep growing.
If you invest in durable businesses at fair valuations with great management teams and competitive advantages, you are likely better off than most clueless investors.
The normal reaction is to panic when you see your stocks go down, but I want you to see this as an opportunity and not a misfortune.
There is always a compelling reason to sell stocks, if you buy into the bad news and narratives, you will end up with very poor results as an investor:
In this article, we will look at 5 promising quality opportunities in the market.
Let’s get into it 👇🏻