‘I’ve made the most money over the last 30 years buying solid companies in terrible markets’: Should I start buying?

I have made the most money over the last 30 years buying solid companies in terrible markets, not the other way around.

For some of the panicked people in the world, the flip side of this situation is you should have cash on hand to buy. I don’t own this stock and am not recommending it, but it’s just an example: Zoom Communications ZM is now down more than 88% since the pandemic. In a recession, are companies going to cut back on Zoom calls or pay to travel more?

My guess is, in looking to cut expenses, they will do more business with Zoom. This is just one stock I have on my shopping list. Can it go down more? Absolutely. As the old phrase goes, don’t catch a falling knife, but these are the types of stocks people should be watching.

Companies with solid balance sheets, that don’t have a lot of debt, produce cash instead of using cash.

This NOT a stock recommendation. Your column is as much about group therapy as financial advice, which is why I wrote this email.

Buying Low

Related: ‘I cannot afford to lose more’: Will Trump’s ‘liberation day’ tariffs hurt my retirement?

You must have more perfect timing than a Swiss watch.

If the smartest people on Wall Street knew exactly what stocks would be spared from a prolonged recession on the back of President Donald Trump’s trade war, markets wouldn’t be heading south in the first place.

But you’re not the only one with plans of big returns: Individual investors had $4.7 billion worth of net equity purchases on April 3, the day after “liberation day” — when Trump announced his “reciprocal” tariffs — meaning they bought that amount of shares more than they sold, according to data from J.P. Morgan.

Not since the pandemic in 2020 have individuals felt there was such an opportunity to buy the dip. The backdrop is stark: U.S. stocks experienced their most dramatic two-day wipeout in history. In total, markets have shed trillions of dollars since Inauguration Day.

Your overall mission of buying low, despite my major reservations about taking gambits on individual stocks, is not completely out of left field. “Finding a bottom is an art, not a science,” Adam Turnquist, chief technical strategist at LPL Financial, told MarketWatch in an interview on Friday. “And while this might not be the bottom, we’re likely getting close.”

The S&P 500 SPX, Dow Jones Industrial Average DJIA and Nasdaq COMP had an extraordinary week. The S&P 500 experienced the biggest swing, at least since 1978, rising over 4% on Tuesday before closing more than 1% lower. U.S. stocks rallied on Wednesday after Trump suspended most country-specific tariffs for 90 days, lost most of their gains Thursday and closed the week in positive territory Friday after Fed officials signaled that they were more concerned about inflation than an imminent recession.

Morgan Stanley’s Global Investment Committee does not endorse the ”buy-the-dip” approach, “but we do see some opportunities for investors elsewhere, especially in the ‘soft landing’ scenario of slower-but-steady economic growth and receding inflation that we anticipate.” The bank recommends favoring defensive sectors like financials, which are likely to benefit from a looser era of deregulation; taking profits in long-duration bonds; and adding non-U.S. equity exposure.

“It is hard to remember a time in the past 30 years when demanding this premium was more important,” according to Lisa Shaelett, chief investment officer, wealth management, at Morgan Stanley. “Consider not only the rapid pace of policy changes coming from Washington but also that the U.S. government’s unsustainable debt and deficits are likely to continue growing. Yet, the current lower term premium doesn’t seem to fully reflect these risks. In addition, bonds tend to struggle with stagflation, which is a rising possibility in the near term.”

With that advice for (not) buying the dip (or at some point in the future, if you feel compelled to do so), the risks of focusing on individual stocks and those other caveats, I like your moxy. I take your point that you’re not giving stock tips — we, at least, have that in common. Investing in the rearview mirror is easy: Zoom soared during the pandemic primarily because millions of people were working from home and they needed to communicate.

Yes, people were not traveling for business trips, so that was part of the equation too, but it mostly benefited from remote work and, while that has stayed with many office workers, more companies (including the federal government) are calling people back to the office.

The stock now sits at around $68 and, if you had purchased Zoom shares during those heady days of the pandemic when it reached $559, you’d be sitting on some hefty losses right about now.

Everyone has opinions about recession-proof stocks, some based on data and others based on conjecture, and any of those people — your anonymous self, perhaps, excluded — have services to sell, whether they’re financial services or financial information.

As my dear old grandmother used to say, if it’s not one thing, it’s another — and if it’s not a trade war or a global pandemic sending stock markets into “free fall” (for now, at least, if you’ll excuse the dramatic language). Put another way, if you invest betting on bull markets, prepare for bear markets too.

This is a trade war that, while well flagged, came with tariffs attached that surprised even the most pessimistic of market observers. The consensus, if there is one, suggests the one investor who appears to be doing well is the one who is well diversified and/or the one who purchased gold GC00.

Don’t miss: I invested $100,000 in the S&P 500 and lost $10,000. How long will it take to recover?

The answer may not be found in stocks that fluctuate wildly with the onset of pandemics and economic downturns. Remember Peloton PTON, which reached a pandemic-era peak of more than $167 and now languishes at $5?

It may be time to consider boring old healthcare, utility and consumer-staples stocks for the medium and long term, in addition to mid- and small-cap equities — although some analysts say the latter tend to underperform during recessions.

Add bonds, cash and non-U.S. equities to your list, too. In other words, you can try to time the market in an attempt to look like the genius who gets it right, perhaps the only one, and buy/sell at the right time, or you can indulge yourself in a symphony of everything and live a full and diversified life.

Hope abides, even in U.S. equities, even as the market faces another bloodbath on Monday. “A shift in regional allocation rarely helps cushion performance in a market correction,” says J.P. Morgan Asset Management.

“Investors concerned about a potential recession in the U.S. may be tempted to shift away from U.S. equities into other equity markets, but during U.S. recessions stock markets in all regions tend to fall — sometimes by more than U.S. equities.”

“When you add in the fact that the dollar appreciated during the last two recessions, it’s far from clear that concerns about a U.S. recession should lead investors to shift from U.S. equities into other equity markets,” it adds. “Investors are normally better off maintaining a regionally diversified portfolio.”

It is human to seek higher ground, but adventurous investors are asking where to find it. J.P. Morgan said hedge funds and ETFs offloaded $40 billion in stocks in the wake of Trump’s “liberation day” tariffs announcement on April 2, even while individual investors like yourself may be seeking bargains.

Those safe havens, according to Goldman Sachs, include billing-software company Amdocs DOX, Bank of New York Mellon BK, grocery chain Kroger KR, automotive-services firm Valvoline VVV, healthcare companies Masimo MASI, Boston Scientific BSX, Medtronic MDT and Thermo Fisher TMO, plus the credit-ratings companies S&P Global SPGI and Moody’s MCO.

View such notes with a jaundiced eye; none of those stocks have escaped the recent bloodletting.

With that in mind, resist playing with all sharp objects.

Don’t miss: U.S. stocks aren’t a screaming buy just yet — but we’re getting close

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