Conviction & Investing - Stocks To Buy Now For 5X!
Summary
Sven begins by critiquing the common desire for "conviction" and specific price targets in investing, citing Pinduoduo as an example of a stock with extreme, unpredictable volatility. He argues that trying to project a stock's future with certainty is flawed, as even a low-probability worst-case scenario can be disastrous. Using Microsoft as an illustration, Sven demonstrates that while an intrinsic value can be calculated, various scenarios (faster growth, recession) lead to widely different valuations. He suggests Microsoft would only be a "strong buy" if its price dropped significantly, for example, to $167 from its current approximate $400, representing a 60-70% decline.
Sven champions a strategy focused on comparing business fundamentals to their market prices. He mentions past successful "buys" identified through his "value investment quadrant" in February 2025 (likely 2023), including:
Sven advises investors to reduce activity and hold current positions when market opportunities are scarce. He states that currently, there are "no great buys" in his public educational quadrant, indicating that "value doesn't slap me in the face," and patience is paramount. To further demonstrate his strategy, Sven plans to launch a public $10,000 YouTube portfolio using Interactive Brokers, where he will actively manage value stock investments. He also touches on past discussions about risks to a "financial bubble," clarifying that his analysis focuses on potential risks, not predictions of timing, and expresses hope that such a bubble does not burst.
Mentioned Stocks
Reasoning: Sven uses Microsoft as an educational example to demonstrate the flaws of conviction and the importance of scenario analysis. He calculates an intrinsic value based on assumptions but shows how varying growth rates and P/E ratios drastically alter the outcome. He explicitly states that Microsoft would be a "strong buy" if its price were around $167, a 60-70% drop from its current level (around $400), implying it is not a strong buy at present.
Reasoning: Sven uses Pinduoduo as a prime example of a stock whose price movements are extremely volatile and unpredictable, having seen increases of 7x and drops of 75%. He uses it to illustrate that conviction in investing, especially with specific price targets, is a risky and often misleading approach, as the stock's nature is to "go anywhere."
Reasoning: Sven recalls recommending Samsung in the past (implied February 2025/2023) when it presented as a "good call" with a P/E ratio of 15, attractive dividends, and strong long-term growth prospects, leading to an almost 6x return. He notes that currently, the stock is again in a phase where it "can go anywhere," detached from fundamentals, which suggests less clear conviction for new entry, although he doesn't explicitly advise selling.
Reasoning: Sven mentions JD Pets as one of the stocks identified as a "buy" from his "value investment quadrant" in February 2025 (likely 2023). Following this, the stock was taken over, resulting in a gain of over 40% for investors.
Reasoning: Rubis was highlighted by Sven as a past "buy" recommendation from his "value investment quadrant" in February 2025 (likely 2023). This recommendation led to a subsequent increase of 43% for the stock.
Reasoning: Nutrien was identified by Sven as a "buy" in his "value investment quadrant" in February 2025 (likely 2023). Depending on the specific purchase point, investors following this recommendation saw a return of 30%.
Reasoning: Archer Daniels Midland was among the stocks Sven identified as a "buy" from his "value investment quadrant" in February 2025 (likely 2023). Following this recommendation, the stock delivered a significant return of 77%.
Reasoning: Petrobras was mentioned by Sven as a past "buy" from his "value investment quadrant" in February 2025 (likely 2023). This recommendation resulted in a 50% increase, or 29% if bought at an already higher point.