Let me tell you a little secret: the stock market is not perfect. Often he makes investment mistakes.
And when it does, you have to be careful. Indeed, the best investment opportunities in history emerged when the stock market made a “mistake”.
For example, in 2001 he wrote off all Internet stocks as overhyped, passing fads doomed to bankruptcy. This mistake allowed ordinary investors to buy world-changing internet stocks like Amazon (Nasdaq:AMZN) at $5. It is an investment that would have turned $10,000 into over $2 million.
The stock market also made a “mistake” in 2008. Wall Street believed that the financial crisis and the bursting of the housing bubble would lead to the end of consumer spending. This mistake allowed ordinary investors to buy high-quality consumer discretionary stocks like lululemon (Nasdaq:LULU) for less than $5. That would have turned $10,000 into over $1.2 million.
Again, in 2018, the market made another investment mistake. He assumed that the Fed was going to deliberately nose-dive the US economy with a series of rate hikes. But that was not the case. And that mistake allowed investors like you and me to buy great growth stocks like Enphase Energy (Nasdaq:ENPH) at huge discounts. Indeed, this could have turned $10,000 into $450,000 in just over two years.
And, like clockwork, the market erred again in March 2020. It thought the COVID-19 pandemic would wipe out the global economy. Of course, that was not the case. But that mistake allowed investors to buy tech stocks like Nio (NYSE:NIO) at $2. And this investment would have turned $10,000 into over $250,000 in less than a year.
The biggest market mistake in a quarter century
You see, the market is not perfect. Every few years he makes some big investment mistakes. And the investors who profit from it organize themselves to make a fortune.
Well, today the market is make another “mistake”. And that may be his biggest mistake in the last 25 years.
Investors who capitalize on this stand to make a fortune over the next few years.
So what “error” am I talking about?
This is to forget the simple reality that technology is redefining everything in our lives.
Technology continues to redefine the world
Tech stocks have gotten a lot of negative reviews lately, mostly because they’re crashing.
But during this crash, investors would be wise to zoom out on the price action and take a look. What will they see? Technology is everywhere.
Today, about one-third of Americans work entirely or primarily from home. And this hybrid work lifestyle is powered by remote work technology platforms such as Zoom (Nasdaq:ZM), DocuSign (Nasdaq:DOCUMENT) and Atlassian (Nasdaq:TEAM).
Globally, approximately 1 in 5 purchases are made online these days. This is thanks to the very high convenience and very low prices of e-commerce sites like Amazon, Etsy (Nasdaq:ETSY) and Soft (NYSE:CHWY).
More than 60% of advertisers’ budgets are now allocated to digital advertising channels, mainly due to the improved targeting tools offered by digital advertising platforms such as Instantaneous (NYSE:INSTANTANEOUS), pinterest (NYSE:PINS) and The trading post (Nasdaq:TTD).
Thanks to the multitude of cheap and high-quality streaming services like netflix (Nasdaq:NFLX) and Roku (Nasdaq:ROKU), US consumers are now watching more content through TV streaming devices than through traditional devices such as set-top boxes and DVRs.
Take advantage of Wall Street’s investment mistakes
No matter where you look, technology has redefined and will continue to redefine every facet of our lives.
This reality has not changed. Yet the stock market is acting the way it has, driving tech stocks down dramatically because they’re “too expensive.”
It’s a Major mistake, just like in 2001, 2008, 2018 and 2020. Today the stock market is making a huge mistake, and is to create a generational investment opportunity.
To underscore the magnitude of this opportunity, allow me to illustrate the magnitude of error.
Over the weekend, my team and I built the following board. It plots the valuations of different types of stocks based on their current market capitalizations versus 2025 sales estimates. It then compares this valuation multiple to how fast the company is growing.
The first basket of stocks we looked at were your typical blue-chip value stocks like Coca Cola (NYSE:KO), Johnson & Johnson (NYSE:JNJ) and Honeywell (Nasdaq:HON).
The second was a group of growth stocks like Shopify (NYSE:STORE), Roku and Block (NYSE:SQ).
And the third was 10 “Strong Buy” shares of our flagship Innovation Investor model portfolio. It is essentially a collection of small hypergrowth stocks.
The data shows that the stock market is currently making its biggest mistake.
On average, value stocks are trading at about 3.3 times estimated 2025 sales. And these companies are growing their sales by about 4% a year. Growth stocks, however, trade at a lower sell multiple (2.3X) for around 7X growth (~30% average revenue growth).
And our Strong Buy stocks are trading at less than 2x 2025 estimates with an average revenue growth rate of 76%.
Hypergrowth stocks that grow about 10 times faster than Coca-Cola are trading at about a 70% discount to that company’s valuation multiple.
That’s a huge discount – and this creates a huge opportunity.
The Final Word on Investing Mistakes
The stock market has blunders. And the key to being a successful investor is capitalizing on those missteps.
Right now the market is making arguably its biggest mistake in 25 years. The result? The greatest investment opportunity of the past quarter century looms before our eyes.
Will you take advantage of it?
Find out how to turn today’s market volatility into personal fortune. Better yet, I’ll give you the names, stock symbols and key trading details of these 10 “Strong Buy” stocks above. These are stocks that rise 10 times faster than Coca-Cola, but are also 70% cheaper.
As of the date of publication, Luke Lango had (neither directly nor indirectly) any position in the securities mentioned in this article.