It's Only Good If It Hurts

This sector just got cut 40%, which is why I am buying it

This is a famous market saying: a good buy is one that makes you cry. No one wants to buy a stock down 40% in a few weeks, those moves are usually correlated with poor performance and weak fundamentals in many minds. A falling stock can’t belong to a good company, right? Otherwise it’d go up.

What many investors forget is that stocks down 40% in a few days or weeks are often still up double digits year-to-date, and triple digits over the last year. Uptrends aren’t up only, especially on growth and narrative names. They’re a continuity of higher highs and higher lows, which can be stomach-wrenching enough to make you give up if you bought at the wrong time.

This article goes over a sector with exactly those characteristics: darlings turned into stinky socks from one week to the next, that few want to buy now that they’re down 40% in a month, while still up 100%+ over the last year.

I’ll cover the sector, the best setups, fundamentals, and my personal buys.