(#stocks , #investing ,#billackman) This video talks about Bill Ackman and why he believes now is a great investing opportunity. It's no secret that this year has been rough for investors in the stock market. Stocks entered a so-called bear market this year as prices fell more than 20% from their highs. The S&P 500 was down as much as 25% from its highs. The Dow Jones was down as much as 20%. The tech heavy NASDAQ has been hit the hardest of them all, down 35% from its high.
Pretty scary stuff for stock market investors, right? But what if I told you that now was actually a great buying opportunity? This isn't coming from me, this is coming from billionaire investor Bill Ackman. In this video we are going to examine why Ackman thinks now is a great time to be buying stocks. We also are going to reveal Ackman’s 4 step checklist to picking great stocks to invest in.
As Bill Ackman mentioned in the clip, the stock market has been getting clobbered this year due to high inflation and the higher interest rates that come along with it. Inflation is running at its highest rate in generations and this is scaring the US Federal Reserve. In an attempt to get inflation under control, the Fed is raising interest rates dramatically and this is negatively impacting stock prices. The hope is that increasing interest rates will help slowdown the economy and cool inflation. In investing, the most commonly used metric to measure interest rates in the economy is the yield on the 10 year US treasury bond. Yield is just a fancy way of saying interest rate. This would be the return you could expect to receive for lending the US government money for 10 years. The yield on the 10 year treasury was just 0.5% in the summer of 2020 and has since risen all the way to 4%.
In the clip, Bill Ackman was making the argument that people who buy stocks now are going to benefit from the tailwind of interest rates coming down as inflation starts to get under control. Declining interest rates are a positive for all stocks. However, Ackman was quick to point out that investors shouldn’t just buy any stock. You want to be selective in which stocks you buy. This is because movements in interest rates are notoriously difficult to predict. You want to buy the right stocks and let declining interest rates be an extra bonus on top. This naturally raises the question of what characteristics should we as investors look for in stocks? Thankfully for us, Ackman has provided a checklist of criteria that he uses at his multi billion dollar hedge fund Pershing Square.
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