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It was Oct. 19, 1987 – Black Monday – and the stock market had just crashed. At the time, I was an analyst in the Financial District in San Francisco.
My then-boss called me from Wall Street. And he sounded like he was ready to sell everything.
But I had other ideas.
After all, if Macy's holds a 25% off sale, shoppers rush down in droves. So why do so many investors panic when the market corrects?
By doing so, they miss out on great bargains.
We're not doing that. We're going shopping…
Fill the Shopping Bag with Cheap Tech Stocks to Buy
While my boss freaked out, I got excited about all the money I would soon make. And history proved me right.
Had you simply invested $2,000 in a Dow Jones Industrial Average index fund the day after the 1987 crash and held it through this week, you'd now have $17,800 – a 790% jump. And that includes the dot-com crash of 2000-2002 and the Great Recession of 2007-2009.
That's why you should look at corrections as a chance to add to your portfolio's long-term gains. And yet, sell-offs present us with a challenge as well. If we buy on the dips too early, we run the risk of getting stopped out to protect capital.
To avoid that, I've developed a system to determine if a stock has fallen so far that it's become available at what I call a "Stupid Cheap Price."
You could look at financial data to find winners you think should rebound based on cash flow, earnings, and operating margins. However, that can consume hours of your time.
There's a simpler method.
All you need to do is look at the stock's 50-day moving average, and then take a discount from that to arrive at an attractive price – the Stupid Cheap Price.
This is a price that over the past 10 weeks investment pros think should be the minimum price for this stock.
I've used this process over many years of investing to great effect. And I generally like to get a discount of at least 10% from the 50-day line.
With that in mind, I want to share with you four stupid cheap stocks to buy that should be on every tech investor's shopping list.
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.