Going with the herd can be bad for your wealth

first_imgThe moral: avoid buying at the top; hold your nose and buy at the bottom. Now, let’s be clear. I’ve absolutely nothing against either DS Smith, or Mondi, or the brokerage house that made the suggestion. All are fine companies, and – at various times – I’ve nearly invested in all three. More to the point, perhaps, I’d be happy to own all three now. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I picked up the bulbs, and headed home.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Paper packaging’s popularityThat same day, by chance, I read a suggestion that investors take a look at paper packaging manufacturers DS Smith and Mondi. Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares Enter Your Email Address And almost always, in my view, sentiment overshoots. Sentiment is higher than is justified on the upside, and lower than is justified on the downside.Put another way, Benjamin Graham’s characterisation of markets as manic-depressive is broadly correct. At which point, I spotted them – on the shelf below, in entirely different packaging. Whereas the usual bulbs were packaged in rigid plastic outers, so that you could see the bulb, the bulbs were now packed in thin cardboard boxes, just like light bulbs used to be.While I’ve no idea of the respective costs of the two form of packaging, or if cost-saving drove this particular decision at all, it clearly wasn’t difficult to see the sustainability agenda at work. With growing concerns over the disposal of plastic waste, and oceans – and fish stocks – becoming polluted by microplastic particles, you could see the logic. Malcolm owns shares in Tesco, Royal Dutch Shell, Primary Health Properties, 3i Infrastructure, Empiric Student Property, British Land, Hammerson, and NewRiver Retail. The Motley Fool UK has recommended British Land Co, DS Smith, Primary Health Properties, and Tesco. For as Warren Buffett sagely remarked, you pay a high price for a cheery consensus.Property worriesToday, I reckon that you can see a similar opportunity playing out in property stocks, where a number of specialist REITs – especially those exposed to the retail sector – have been trading on very low multiples over the past couple of years or so, as Brexit worries have sapped investor confidence. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Holdings in British Land, Hammerson and NewRiver Retail will yet come good, I hope. In the meantime, I’m enjoying the decent income that they throw off.Sentiment overshootsThe real lesson from all this is a very simple one, I believe. The other day, I was in my local Tesco, having gone in to pick up some LED light bulbs. To my irritation, they’d only got one bulb of the type that I needed, and I wanted three. It was annoying, because a couple of days earlier, there had been an ample supply, and I had nearly bought the bulbs then. And these were income picks, don’t forget – boring stocks where the earnings come from tenants renting the properties that they own. But that isn’t to say that I think that right now is necessarily a good time to get into companies that manufacture paper packaging. If demand for paper packaging is rising, then to my mind, that’s likely to be reflected in the share price.Right now, I’d be more interested in seeing if there were any bargains on offer among supposedly beaten-down manufacturers of plastic packaging. RPC Packaging might have made a good candidate, up until its acquisition by America’s Berry Global Group early last year.A cheery consensus costs youAs regular readers will recognize, I’m partial to this kind of thinking. As I’ve written before, Royal Dutch Shell dipped below £13 at one point, prompting me to load up on them, at a very attractive yield. They’re almost £10 higher now, standing at £22.80 as I write these words, and reached over £28 in May 2018. Markets move in cycles; so too do the prices of individual shares, as investor sentiment waxes and wanes. Confidence builds; confidence declines; prices rise; prices fall. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Going with the herd can be bad for your wealth Malcolm Wheatley | Sunday, 26th January, 2020 It’s exactly three years, for instance, since worries about a slowing global economy sent shares of resources stocks crashing through the floor. For some, the tide has already turned. I’m up 40% in Primary Health Properties, which I bought in 2018, up 27% in 3i Infrastructure, also bought in 2018, and up 18% in Empiric Student Property, again bought in 2018. Image source: Getty Images “This Stock Could Be Like Buying Amazon in 1997” The time to buy stocks isn’t when everyone is piling in, but when everyone is heading for the exit, driven by the latest panic du jour, whatever that may be. Central to the argument: e-commerce is driving demand for packaging, and increasingly environmentally-conscious consumers appreciate paper packaging’s sustainability credentials. It doesn’t harm the investment thesis, either, that DS Smith is apparently Europe’s largest cardboard and paper recycler. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Malcolm Wheatleylast_img read more