Clorox Stock Now Trades At A Higher P/E Ratio Than Nvidia!! That Is A Problem! By James R. Wigen – Sr. Portfolio Manager at Independent Financial Management

The stock market is Selling off the past several days, forcing many investors to think, Sell Growth stocks and Buy Value stocks!

This trend is causing stocks like Clorox to now trade to a P/E Ratio of 35.63, which is higher than beloved Growth stock Nvidia, as just one example of this trend.  One problem with this philosophy just played out over the past few weeks, Value stocks reported earnings and declined 10%-15%.  Investors who are trying to hide in boring Value stocks need to be very careful, as once this market decides to price forward Growth stocks again, Value investors will be stuck holding stocks like Clorox for years to come if they bought in high, hoping Clorox would go higher.

This is another example of how retail investors love to buy High and Hope the stock goes higher.  In addition, this is an example of Large Cap Mutual Fund Managers who can’t Sell and put 20%-30% of the fund in Cash, Sell Growth stocks like Microsoft & Facebook, and Buy stocks like Clorox & Kraft Foods.

What is a good answer for retail investors? Do nothing, and sit in Cash or buy 1-10 shares of High Quality Growth stocks when there are big market declines.  Everyone always says to make money investing in stocks, you need to Buy Low and Sell High, however, I am always amazed at how few people actually do it.  When the market declines sharply, your interest in Accumulating more shares of good Growth stocks should be greater than being interested in Selling.  If the underline business is strong, give the stock time to recover, as markets go up and down, the price at which investors are willing to pay for Growth is what changes, and that know one can predict successfully on a consistent basis.

 

James CPM® designation earned through Academy of Finance and Management or GAFM®

Investing involves serious risks and past performance is no guarantee of future performance or success.  This is not an offer to buy or sell securities and nothing contained herein should be interpreted as a recommendation regarding any investment or investment strategy.  Before making any decision to invest, first read the relevant disclosures and important information provided to you.

Please take the proper risk for your current situation and get the advice from a financial professional who clearly understands your current & future goals and objectives.

Investments are NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE   

All opinions expressed by James R. Wigen on this website are solely his opinions and do not reflect the opinions of IFP Advisors, LLC, dba Independent Financial Partners, (IFP).  Investment Advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Adviser. IFP and Independent Financial Management, LLC (IFM), are separate entities.

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