You know the old saying: Flowers say I'm sorry, chocolate says I love you. But what does buying stocks say?
In this crazy market, gifting your sweetheart stocks for Valentine's Day not only tells them you truly want the best for them, but also says you're in it for the long haul. Because make no mistake, stocks will probably be worth more by Valentine's Day 2028 than Valentine's Day 2018.
Last week was the worst for stocks since January 2016. Before the now three-day rally kicked off Friday, Feb. 9, stocks had been on a nosedive that saw the type of record market outflows not experienced since 2008. Plus, volatility boomed roughly 65% last week.
To be sure, timing a market bottom is tough work. But in the stock market's whole history, it's gone invariably higher over time.
The S&P 500 from May 1977 through January 2018 has tallied an annualized stock return of 8.67% and an annualized total return of 11.83%, according to S&P Global Indices. During that period, there have been numerous economic downturns and three big market crashes, yet stock prices keeps charging ahead.
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The Dow Jones Industrial Average has returned 212.6% over the past 20 years, according to S&P's data. There were only six years it posted negative returns on an annual basis in that time.
So what stocks should you buy your sweetheart? The answer is easy: the ones that have pulled back of late for no real reason and have still have a sexy story.
While Action Alerts Plus holding Apple Inc's (AAPL) stock is by no means dirt cheap, consider where it has been during the fresh market slide. On Jan. 18, shares traded at $179.26. On Friday, Feb. 9, they were as low as $150.24, a 16% discount just based on the broader market selloff. Did something fundamental happen at Apple that really makes it worth 16% less in about two weeks? No. And Wall Street agrees: The 12-month average price target for Apple's stock is $192.06, according to FactSet.
If the numbers aren't enough to convince you stocks are a sweet deal right now, take Warren Buffett's lead here. He placed a bet with hedge fund Protege Partners in 2008 -- ahead of the financial crisis. Per the terms, Buffett contended that an S&P 500 index fund would outperform a hand-picked hedge fund portfolio over 10 years, a classic passive vs. active scenario.
Even after Buffett's fund lost 37% of its value in the financial crisis, it still came out far and away the winner when the $1 million bet expired Dec. 31, 2017. Buffett's bet had gained 7.1% per year, or about $854,000 total. Protege's bet had gained 2.2% per year, or about $220,000 total.
All in all, the way to one's heart isn't through their stomachs anymore. This Valentine's Day, the way to the heart is through the portfolio. Don't be dumb -- buy some stock this Valentine's Day. With the market opening sharply lower this Feb. 14, you could get an even better deal than two-for-one roses.
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