$DraftKings Inc.(DKNG)$ $Uber(UBER)$ $Pinterest, Inc.(PINS)$ $Amazon.com(AMZN)$ $Visa(V)$
I find it fascinating how the stock market and asset prices reacted following President Donald Trump’s election in November. Practically every asset class—whether cryptocurrencies, stocks, real estate, or other investments—experienced a surge in price. There was an undeniable wave of optimism that swept across the country, driving up valuations across the board.
The market’s enthusiasm was largely fueled by expectations of business-friendly policies, deregulation, tax cuts, and an overall pro-growth agenda. Investors anticipated that Trump’s administration would be beneficial for corporations, potentially leading to higher profits and stronger economic expansion. As a result, asset prices climbed rapidly in the months following his victory.
However, just a short time later, we’re witnessing a sharp contrast. The same market that once soared in response to Trump’s presidency is now experiencing turbulence, with panic setting in. The initial excitement has given way to uncertainty, and many investors are reconsidering their positions. The stock market, once driven by optimism, is now reacting negatively to the president’s latest policy moves.
One of the major concerns weighing on the market is the recent increase in tariffs. Tariffs, by their nature, disrupt global trade and raise costs for businesses and consumers alike. The fear among investors is that these protectionist measures could trigger retaliatory tariffs from other nations, leading to a full-fledged trade war. Such an outcome could slow economic growth, hurt corporate earnings, and ultimately put downward pressure on stock prices.
In my opinion, three key policy actions taken by President Trump since taking office have had the most significant impact on the stock market.
1. Reducing Government Spending
One of Trump’s primary policy objectives has been reducing the size of government and cutting federal expenditures. This move is not inflationary. In fact, cutting government spending can help keep inflation in check.
When the government spends less, it means fewer dollars are being injected into the economy from the public sector. Additionally, reduced government spending often leads to a smaller government workforce, freeing up employees to transition into the private sector. Many of these workers are highly skilled, and businesses in the private sector actively seek out former government employees for their expertise.
From an economic standpoint, this shift can be beneficial, as it leads to increased efficiency and productivity in the private sector. However, from a market perspective, reduced government spending can have mixed effects. While it helps control inflation, it can also lead to slower economic growth if public-sector job losses outweigh the gains in private employment.
2. Implementing Tariffs and Trade Policies
The most significant and controversial policy change under Trump has been his aggressive approach to trade. The administration has imposed tariffs on a wide range of goods, affecting nearly every major trading partner and product category.
Tariffs are inflationary by nature because they increase the cost of imported goods. When businesses have to pay higher prices for raw materials and finished products, they often pass those costs on to consumers. As a result, inflation rises, reducing purchasing power and slowing consumer spending.
Additionally, tariffs create uncertainty in the global economy. Companies that rely on international supply chains face disruptions, making it harder to plan for the future. Investors dislike uncertainty, and this has contributed to recent stock market volatility. If trade tensions continue to escalate, we could see further market declines.
3. Restricting Immigration
Another key policy move has been tightening immigration laws and reducing the number of foreign workers entering the U.S. This policy is also inflationary.
When the labor force shrinks, businesses have fewer workers available, which drives up wages. While higher wages might seem like a positive development, they also lead to increased costs for businesses, which can then be passed on to consumers in the form of higher prices.
This impact is especially pronounced in industries that rely heavily on immigrant labor, such as agriculture, construction, and hospitality. If businesses struggle to find workers, they either have to pay more or reduce their operations, both of which can contribute to economic slowdowns.
Market Outlook and Investment Strategy
As a result of these policies, the stock market has become increasingly volatile. Many investors are selling off their holdings out of fear, and we’ve seen a significant pullback in stock prices. While this reaction is understandable, I believe it also presents an opportunity.
Historically, market downturns have created some of the best buying opportunities for long-term investors. When stocks fall, high-quality businesses become available at discounted prices. This is precisely the kind of environment that allows patient investors to accumulate strong companies at attractive valuations.
Now, I don’t know how much further the market will decline. It could drop another 10%, 20%, or even 30%. No one can predict the exact bottom. However, rather than trying to time the market perfectly, I’m focusing on gradually building my positions in excellent companies.
I’m going to highlight five stocks that I believe are great investment opportunities in this environment. Some of them are undervalued, while others are fairly priced but still offer strong long-term potential.
1. Amazon (AMZN)
Amazon is one of the most dominant companies in the world, with nearly $700 billion in annual revenue. It has strong competitive advantages in both e-commerce and cloud computing, and it continues to invest heavily in artificial intelligence to improve efficiency.
Currently, Amazon’s stock is trading at $192 per share. Based on my proprietary discounted cash flow valuation model, I estimate its intrinsic value to be $325 per share. This means that, at current prices, Amazon is trading at a significant discount to its true worth.
For those looking to invest, I recommend using a dollar-cost averaging strategy. For example, if you have $1,000 to invest, you could buy $250 worth of Amazon stock now and add more if the price declines further.
2. Visa (V)
Visa is another excellent company, though it is not currently undervalued. My valuation places Visa’s intrinsic value at $345 per share, while the stock is currently trading at $343. This means it is fairly priced but not cheap.
However, Visa has one of the strongest business models in the market. It benefits from inflation, as it earns revenue as a percentage of transaction values. When prices rise, Visa’s revenue increases as well. Given the current inflationary environment, Visa is a great stock to own.
3. Uber (UBER)
Uber is my top-rated stock right now. I track over 100 companies, and Uber currently ranks as my highest-rated investment opportunity based on valuation and other factors.
Right now, Uber’s stock is trading at $73 per share, but I estimate its intrinsic value to be over $112 per share. I recently purchased Uber stock myself, taking advantage of the current market selloff.
One of the biggest concerns for Uber investors is the rise of driverless car technology. However, I believe these concerns are overstated. While self-driving technology will continue to develop, I don’t see it replacing ride-hailing services on a large scale anytime soon.
Many investors assume that widespread adoption of autonomous vehicles will render Uber obsolete, but I disagree. There are still significant technological, regulatory, and consumer adoption hurdles to overcome. For now, Uber remains a strong player in the transportation space, and I believe it is significantly undervalued.
4. Pinterest (PINS)
The next stock I want to highlight is Pinterest, which I consider to be one of the most undervalued companies in my watchlist right now. Based on my intrinsic valuation model, I estimate Pinterest’s true value to be around $70 per share, yet it is currently trading at just over $31 per share. This presents a significant buying opportunity for long-term investors.
Pinterest, like many advertising-driven businesses, is facing short-term headwinds. If economic growth slows down—which we are already beginning to see—businesses are likely to reduce their advertising budgets. This would, in turn, result in lower revenue for Pinterest. However, it’s important to recognize that these challenges are temporary.
Advertising is a fundamental part of the global economy. No matter what happens, companies will always need to market their products and services to consumers. In my view, advertising is a forever industry—it may evolve over time, but it will never disappear. Once economic conditions stabilize, ad spending will rebound, and Pinterest, with its visually-driven and high-intent user base, will be one of the biggest beneficiaries.
Additionally, the global advertising market is massive, approaching $1 trillion in annual spending. As Pinterest continues to refine its ad platform and attract more advertisers, it has the potential to capture a larger share of this market. Given its current valuation and long-term growth prospects, I believe Pinterest is a great stock to buy during this market downturn.
5. DraftKings (DKNG)
Last but not least, I want to highlight DraftKings, a leading online gaming company. DraftKings allows users to wager on sporting events and, in some states, participate in online casino games like blackjack and poker.
Right now, DraftKings stock is trading around $33 per share, but based on my valuation, I believe it is worth closer to $64 per share. This represents a significant discount, making it an attractive investment at current levels.
One of the key reasons I am bullish on DraftKings is the resilience of the gaming industry. Historically, gambling and sports betting have proven to be relatively recession-proof. Even during economic downturns, people continue to engage in gaming and speculative activities. In fact, some might argue that when people are struggling financially, they are more inclined to take chances in hopes of making quick gains.
A perfect example of this speculative behavior can be seen in cryptocurrencies. Despite widespread economic uncertainty, high inflation, and reports of job losses, cryptocurrency prices remain at elevated levels. This suggests that people are not abandoning speculative investments, even when facing financial hardship. The same psychological factors that keep people invested in crypto assets could also support demand for DraftKings’ betting services, making it a more resilient business than many assume.
Another reason I like DraftKings is that it operates in a rapidly growing industry. Sports betting in the U.S. has traditionally been dominated by the black market, with billions of dollars wagered illegally every year. However, as more states legalize sports betting, DraftKings is well-positioned to capture market share from unregulated operators.
Furthermore, DraftKings has strong political tailwinds working in its favor. State governments benefit from legalized sports betting because it generates substantial tax revenue. Given that politicians are always looking for additional sources of funding, there is a strong likelihood that more states will legalize sports betting in the coming years. This expansion will provide DraftKings with new growth opportunities and help solidify its position as an industry leader.
Unlike traditional casino operators, DraftKings operates entirely online, which gives it a major cost advantage. The company does not have to invest heavily in physical locations, hotels, or massive infrastructure. Instead, its business model revolves around a highly scalable digital platform, allowing it to expand into new markets quickly and efficiently.
My Thoughts on the Market and Investment Strategy
These five stocks—Amazon, Visa, Uber, Pinterest, and DraftKings—are all excellent investment opportunities in the current market environment. While volatility is likely to persist, history has shown that downturns create some of the best buying opportunities for long-term investors.
It’s important to understand that market volatility doesn’t disappear overnight. It tends to come in waves and persist over time before eventually stabilizing. For that reason, I don’t recommend going all-in at once. Instead, I suggest using a segmented buying approach—allocating capital in smaller increments over time.
For example, if you plan to invest $1,000 in a stock, consider breaking that up into four purchases of $250 each. This way, if the stock drops further, you’ll have additional capital to buy at lower prices. This strategy helps reduce risk and ensures that you’re taking advantage of market fluctuations rather than trying to time the exact bottom, which is nearly impossible.
Personally, I’ve already begun deploying capital. A few weeks ago, I purchased Uber stock, and I’m continuing to watch the market for additional opportunities. As economic conditions evolve, I’ll be making further allocations into high-quality businesses that I believe will perform well over the long term.
Conclusion
The current market volatility is a challenge for many investors, but it also presents a rare opportunity to buy high-quality businesses at lower prices. While uncertainty remains, those who take a disciplined, long-term approach will likely benefit from these market conditions in the years to come.
By focusing on strong companies with competitive advantages and solid financials, investors can build a resilient portfolio that weathers economic fluctuations. Whether through dollar-cost averaging or strategic accumulation, now is the time to prepare for the future.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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