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Mr. Market is a very strange individual. Last month he was offering me a collection of his 100 largest UK stocks with a record price attached.
Now, just 20 days later, he offers me the same thing. FTSE 100 for 8% less.
I have a much longer time horizon than Mr. Market, so I’m inclined to take him up on his offer. This is why.
Why are you scared?
First of all, before I look at what this character is offering me today, why exactly is he so scared?
Well, to be clear, you have reason to be concerned. When the US President himself is forced to tell citizens that their bank deposits are safe, then we can assume that financial markets are in trouble.
The fallout from the Silicon Valley Bank collapse late last week is still looming. But they have already closed two cryptocurrency banks, Silvergate Capital and Signature Bank. AND swiss credit shares fell to a new low today.
All of this has many investors worried that another general banking crisis is unfolding. That would obviously be concerning and explains the fall in shares of UK listed banks in recent days.
| Stock price performance in 5 days | 1 Year Stock Price Performance | 5-Year Stock Price Performance | |
| barclays | -16.2% | -19.5% | -32.6% |
| HSBC holdings | -12.4% | +10.8% | -22.5% |
| NatWest Group | -9.8% | +3.2% | -20.5% |
| lloyds | -9.5% | -3.1% | -30.1% |
I should note that these stock price figures do not include dividends and therefore do not constitute the total returns received from these stocks. But they do demonstrate the extraordinary volatility observed in recent days.
Other than index funds, my portfolio has no exposure to banks. Of course, that hasn’t stopped him from taking a hit in recent days.
But because the sell-off has been largely indiscriminate, I just see it as a buying opportunity.
What am I doing
This volatility has come at an opportune time for me because I have some extra money to invest. So what am I looking to buy?
Well, I’m a big fan of Peter Lynch’s idea that “The best stock to buy is the one you already own..”
The gist of it is that there was a reason I bought a stock in the first place. So unless the company’s fundamentals have deteriorated, why not double down on that stock?
this leads me to ashtead. The construction equipment rental company recently raised its full-year revenue guidance. Underlying profit before taxes went up and the dividend was increased. However, the stock is down 13.5% in less than a week.
Other FTSE 100 stocks I own that have fallen in the last five days include insurer legal and general (-11%) and mining giant glencore (-13.5%).
I can add to all of these stocks, despite the risk of further declines.
long term mindset
At times like these, I’m glad I’m just an ordinary buy-and-hold investor.
Unlike some fund managers, I don’t have to time the market and get out before it crashes. I don’t have to obsess over hitting quarterly performance targets or worry about whether stock prices might fall further.
I can look forward to weeks like this and take advantage of buying opportunities when they arise.
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