The Market Opportunity in Adversity — Find Ideas You Can Invest In Now
I came across this tweet over the weekend and thought it was worth sharing with you:
Source: Twitter @markminervini
Mark Minervini is a fairly well-known stock trader and he’s talking about accepting the trials and tribulations of that pursuit.
But the idea that there’s opportunity in adversity can apply in many ways.
It’s how you deal with setbacks that defines your future, not the setback itself.
For example, did you know that billionaire Michael Bloomberg was sacked in 1981 by Salomon Brothers?
With $10 million to his name, he managed to turn it into a $53.2 billion fortune.
OK, sure, he was going to be rich either way.
But I’m sure he would’ve never reached the stratospheric levels of wealth he has today without getting the chop in 1981. He says so himself.
Perhaps a better ‘rags to riches’ tale is the life story of Walt Disney.
Unbelievably, Disney was actually fired from his first job as a Kansas City Star newspaper artist because he ‘lacked imagination and had no good ideas’!
We all know what happened next…
Even the late, great Steve Jobs of Apple was fired once. And not just by anyone, but by the very company he founded, Apple.
But 12 years on in 1997 he once again took charge of the company and proceeded to create the success story that is Apple, that we all know today.
He once told a group of Stanford graduates:
‘…getting fired from Apple was the best thing that could have ever happened to [him].’
Which brings me to dealing with today’s economy…
Emerging from the flux
There’s no doubt we’re in a bit of a pickle.
And I find it hard to believe we’ll get a V-shaped rally any time soon. The economic recovery will likely be slower than that.
But that doesn’t mean there aren’t great ideas you can invest in right now.
In fact, history tells us that times like this are ideal times to invest for the brave and prepared.
After all, it’s in this flux that new ideas, new trends, and new companies emerge.
Consider the Great Depression of 1929–33. The time that everyone describes as the worst economy in history.
Well, despite that situation, a few well-chosen picks over this time would’ve created multi-generational wealth.
Source: The Hustle
Or how about when the Second World War was about to kick off?
I’m sure most investors were running for the hills as Hitler’s forces invaded half of Europe.
Not one man though…
In 1939, at the tender age of 27, an American scholar called John Templeton hit upon an unorthodox idea he was convinced would make his fortune.
While everyone else was panicking, he calmly bought $100 worth of stock in every New York Stock Exchange-listed share that was trading for less than $1.
By 1943 John’s strategy had turned $10,000 into $40,000. That’s $30,000 pure profit.
It kicked off John Templeton’s investing career and he died a billionaire at the age of 95 in 2008.
This strategy of investing through crisis points has been true in recent times, too.
Alibaba emerged as a major force right after the SARS outbreak of 2003, becoming the biggest IPO in history (at the time) in 2014.
And in 2008 as the global financial crisis crushed the global economy, it also spurred innovation and wealth creation on a scale rarely seen before.
For example, Uber was founded in 2009 in the pit of the crisis. In 2011 it was already worth $60 million.
By 2015, it had grown a staggering 83,233%.
Or Airbnb. It was founded in 2008 — as the banking system imploded. Yet that didn’t stop it…in fact, its growth went exponential almost immediately.
I think you get the point…there’s opportunity in adversity.
But like I said at the start, you’ve got to choose wisely too.
Here’s where to start looking…
This crisis’ winners and losers
There’s no question that life will change after this. Some changes will be subtle, some will be dramatic.
For example, one interesting idea I’m reading about is the idea that properties in rural and country areas will become more attractive as young people embrace a ‘working from home’ lifestyle.
As reported in Business Insider recently:
‘Glenn Kelman, the CEO of real-estate company Redfin, recently told CNBC that “rural demand is much stronger right now than urban demand, and that’s a flip from where it’s been for the longest time, where everybody wanted to live in the city.”
‘“There seems to be a profound, psychological change among consumers who are looking for houses,” Kelman added.’
From a stock investing point of view, this table below shows potential winners and losers emerging from the working from home trend.
Source: BCG Henderson Institute
There are some interesting ideas there for you to delve into.
But ultimately, you’ve got to be brave enough to back your judgement, even when others think the world is about to collapse.
Editor, Money Morning
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