When it comes to stock market corrections, the urge to sell and run for cover is completely understandable – but it's the wrong move.
Instead, when the going gets tough, the tough… go shopping.
Shopping after a market sell-off is absolutely critical to capture the maximum possible profits. Remember, the markets' powerful upward bias means corrections and even crashes will always pass into history, giving way to wealth-generating bull runs.
To capture that inevitable upside, we recommend having a list – ready at all times – of quality, must-have shares to pick up at "fire sale" prices during sell-offs.
And today, our strategists will share some of their own market-correction shopping lists, and even how to lay "profit traps" to pick them up at the price you want.
William Patalon III, Executive Editor
One company I like right now is General Electric Co. (NYSE: GE), the industrial heavyweight that's in full-tilt turnaround mode. It represents almost all the qualities I'm looking for in a stock in this kind of market.
First, I like the stocks of companies that are tied into long-term trends, and whose share prices are poised to benefit from multiple catalysts.
And GE is poised to benefit from several solid catalysts. I've shared all of them with my paid-up Private Briefing subscribers, but I want everyone to be in on this.
Some of the most important forces forming up under GE shares are "growth triggers," and the sheer volume of "insider buying" that's been happening.
GE is in several growth segments: Aircraft engines, medical-imaging equipment, power generation, water treatment and, as a great special "kicker" – the "Internet of Everything" (IoE). Demand in each of those sectors is only going to grow, so GE can take comfort in knowing there will be plenty of demand for its wares long term.
Stock Catalyst No. 3 has to do with "legal insider trading." In our 1998 Prentice Hall book, Contrarian Investing, co-author Anthony M. Gallea and I found that massed buying by insiders was the single-biggest indicator that a stock was going to move higher.
Corporate insiders, you see, sell their company's shares for many reasons: tax preparation, estate planning, and diversification are a few examples. But insiders buy for only one reason – they see a chance to make money on their own stock.
A lot of money.
Over the last 18 months, there's been a hell of a lot of buying by GE insiders.
Last year, CEO Jeffrey Immelt snapped up 40,000 shares of GE at slightly more than $25 a share – dropping a bit more than $1 million to make that happen. That brought Immelt's holdings to 1.86 million GE shares, worth about $47 million.
And Immelt wasn't alone.
Two independent GE directors – Geoffrey Beattie and James Rohr – bought an aggregate 14,000 shares between them, spending $103,000 to do so.
Three execs… $1.1 million in purchases.
This was a significant transaction. And we've seen more insider buying since then.
In April, four General Electric directors bought more than 45,000 company shares.
GE is currently trading at $25, so that means you can buy in now at a price that's equal to – or even cheaper – than the price the so-called insider "smart money" bought at.
It doesn't get much better than that.