The same thing happens again and again: Stocks like Novo Nordisk
$NOVO B (+1,26 %) or UnitedHealth $UNH (-6,32 %) lose a lot of value and suddenly everyone senses a great opportunity to get in. "Now the share is cheap!", they say. But be careful: a falling share price does not automatically make a share attractive.
There are almost always reasons for share price falls. In the case of UnitedHealth, for example, political risks and growing competition in the healthcare sector are causing uncertainty. At Novo Nordisk, the hype surrounding weight-loss drugs is being held back by real supply problems and high valuations.
Many investors are buying into the falling knife because it looks like a "bargain" but price does not equal value! A company that costs 30-60% less today can still be too expensive if the prospects are poor.
👉 Instead of betting on individual stocks, broadly diversified ETFs such as the FTSE All-World $VWRL (-2,49 %)
$FWRG (-2,4 %) provide a better balance of risk and return:
- More than 3000 companies
- Cross-sector - tech, pharma, industrials, consumer, financials, etc.
- No cluster risk: if one company stumbles, others pick it up
- Proven Long-term return of 6-8 % p.a. over decades
Additional tips from the Lord:
If you are still looking for excess returns or additional diversification, get 2-3 more satellites such as Bitcoin $BTC (+0,52 %) , gold $ZGLD or a Nasdaq Etf $XNAS (-3,21 %).
Conclusion:
Buying cheap is good, but only if you know what you are actually buying and not because the price was there once and has now fallen by a few percent. This is not the way to strong returns in the long term, but only entertaining gambling fantasies. Better go to the casino for that! Individual stocks can dazzle in the short term, but disappoint in the long term. An all-world ETF is boring but exactly the opposite in terms of returns.
Thanks for reading your Sith Lord Vader!
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