Over the years I’ve had dozens of conversations that started something like this:
“Don, what do you think about buying some oil stocks? Looks like oil is going to stay pretty high for some time, and oil companies are making money hand over fist”.
But I’ve never had anyone call me up and say something like this:
“Don, housing stocks are in the toilet and ones that make starter homes and depend on sub-prime mortgages are just getting slaughtered, what do you think about buying some of those?”.
It’s all fine and good to say “Buy low, sell high”. But the reality is that it’s hard to do. When the news is good, it’s easy to buy. When all the news is bad, it’s scary. But of the above two conversations, which one do you think is the most likely to lead you to real profits 5 or 10 years from now? The one about oil stocks that have already been bid to the moon? Or the one about housing stocks that people can’t give away?
I’m not saying short oil stocks, or mortgage the house (pun intended) and buy construction company stocks. But opportunity is more likely to be in those conversations we never have.