Is This A Buying Opportunity?
Summary
- The Nasdaq Composite is down 5% from its record highs, bitcoin has slumped 29% since November, and the Ark Innovation ETF (ARKK) is down 41% from its February peak.
- Former Sharper Image CEO sees this time as a buying opportunity and is putting his money to work, averaging into long-dated call options that are two years out.
- Richard Thalheimer expects to see some upward movement after the declines of the past two weeks.
Is This a Buying Opportunity?
Definitely, some froth has come out of the market, mostly in fear of a tighter Fed, and also a concern that Omicron is slowing the economy.
The Nasdaq Composite is down 5% from its record highs, bitcoin has slumped 29% since November, and the Ark Innovation ETF (ARKK) is down 41% from its February peak.
Is this a temporary dip, presenting a buying opportunity, or a long-term downtrend?
I am thinking that this is a buying opportunity, and accordingly, I've been putting money to work, averaging into long-dated call options that are two years out, at strike prices just slightly above the current price.
New positions have been initiated in CMG, CRM, NVDA, AAPL, CRWD, AXON, BITO, CHPT, RH, ISRG, AMZN, SHOP, BA, MRVL, PYPL, HD, and TSLA.
If you follow me, you know I nibble in, that is I buy into a downtrend as I perceive it to be approaching a bottom, and keep nibbling, with the goal of acquiring some near the bottom, some at the bottom, and some as we come out of the bottom. Using call options requires less cash than buying the actual stocks, and if the strategy works - that we eventually see an uptick - the percentage gain is much higher with options.
Even if the market is not going to rebound strongly, I still expect to see some upward movement after the declines of the past two weeks.
Are we making a smart investment? Or perhaps catching a falling knife? We will see!
For more on buying options, and investing in general, check out my new book, The Sharper Investor, available on Amazon in Kindle, audiobook, and hardcover.
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