Sometimes the trick to making money in the stock market is knowing what not to buy as much as it is finding bargain stocks to buy.
Stocks that everybody love usually trade at nosebleed valuations.
Rather than owning a business, folks trading these stocks are often playing a rousing game “Pass the Burning Match.”
You can make money at this game as long as you’re able to get someone else to grab the match from you and avoid the burn.
However, when momentum in these stocks shifts and there’s no one left to take the match, that’s when you get burned.
The good news is that there’s a way to identify these overvalued fire starters and keep them from burning a hole in your portfolio…
I have talked about ways to make money in tech stocks in spite of being a value-conscious investor.
Much of the time, the leading tech stocks trade at nosebleed multiples, making it very difficult for those who can add and subtract correctly – with maybe a little multiplication thrown in – to find and own a company that’s worth anything close to the price of its shares.
It’s been an issue for every value-oriented investor I’ve ever met and continues to be one today.
I’ve shown you that tech stocks at less than 12 times free cash flow and tech stocks that have high dividends can be winning strategies.
The problem is that there are not very many at any given moment of time to fill a portfolio.
Today I’m going to give you another technique that you can add to the mix and put more technology to your portfolio…