IS IT TOO EARLY TO BUY THE DIP?! (MY SIMPLE PLAN)
In a Nutshell
The market dropped sharply after Google missed earnings and showed negative free cash flow from heavy AI spending, wiping out over $400B in value. The speaker bought Google shares on the 12-13% dip but stresses buying only what you can afford to hold through further volatility—avoid margin, leverage, or oversized positions that force exits. Key warning: even quality stocks can drop 10-20% more before recovering, so size positions conservatively and only invest money you're prepared to lose if the downturn persists.
These notes were generated by AI and may contain inaccuracies.
Halloween came early with scary returns as the US market saw $470 billion wiped off today following the Personal Consumption Expenditures (PCE) inflation report hitting a four-month high. The speaker clarifies that he is not an actual $9,800 winner in his Google deal despite the platform showing an 8-12% gain on an $80,000 short position held overnight. The platform only calculates the difference between closing and opening prices, which created a misleading figure. The speaker maintains a buying position in Google after purchasing shares on the dip.
The speaker disputes that the Federal Open Market Committee interest rate decision and press conference caused the decline, noting markets actually rose after these events. Instead, Google is identified as the primary culprit, dropping more than 13% during live trading. The speaker was visibly angry because the "Big Seven" companies are not supposed to perform this way, though he views this as an investment opportunity.
The speaker emphasizes putting yourself in a position that allows you to succeed by buying one share rather than 100 shares you cannot afford to hold through volatility. This approach enables tolerating market fluctuations without being forced out. Investors who overused leverage or took overly aggressive positions faced margin calls or liquidation when stocks dropped 10%. The speaker notes these companies are driving out investors who cannot afford the risks.
Google missed both earnings per share and revenue forecasts. The major concern is heavy investment in artificial intelligence, causing free cash flow to become negative for nearly the first time in company history. The company is spending $205 billion for 2026 with expectations of even higher spending in 2027. This raises concerns about return on investment timing, especially if the Federal Reserve raises interest rates at the next meeting in early December, making AI expansion funding more expensive.
The speaker does not believe in MSTR or cryptocurrencies, which is why he avoids putting money there. He notes that early Bitcoin investors likely profited if they avoided over-leveraging at overbought levels like Michael Saylor. Uncertainty periods represent favorite investment times, though this does not mean others must follow the same approach.
The speaker shares concerns about Google's negative free cash flow and continued heavy AI spending. Google is on track to wipe out more than $400 billion of market value, potentially ranking as the second-largest loss in US market history after Nvidia. The speaker acknowledges there are real concerns while discussing buying opportunities.
High-quality companies should be invested in with a long-term vision, but investors must position themselves to not be forced out even if conditions remain bad for a day, week, or month. The market may remain downward, and investors must determine if they can endure that period and associated risks. If unable to afford the risk, buying should be avoided until market direction is confirmed.
The speaker uses himself as an example of wanting viewers to succeed by investing in valued companies. Google serves as his personal example, but investments should only be made with amounts one can afford to lose. Buying should be cautious rather than aggressive, without using margin or leverage to avoid forced exits. Markets tend to go up more than down, and if believing the current downturn is temporary, appropriate positioning enables benefiting from recovery.
Buying the dip in good companies with every penny in an account is considered extremely aggressive and risky. Even good companies can drop 5%, 10%, 15%, or 20%, potentially triggering margin calls or forced selling. Emotions may become too strong to handle. Always calculate that things may get worse before improving. If planning to invest a certain amount, consider what happens with an additional 10-20% drop and whether that loss amount is manageable.
Marvel Technologies dropped 12.1% and Micron Technologies fell 4.65%. SanDisk reports earnings after market close with a downward gap in memory chips. Amazon is down 3.4% testing crucial support, scheduled to announce earnings with forecasts of $1.96 per share and $202 billion revenue. ServiceNow stock dropped 26% today.
The speaker avoided trading ServiceNow during the live session, recognizing the trend was against him and closing the position entirely. ServiceNow appeared technically oversold but momentum remained negative. The only current position mentioned is Google, purchased on the 12-13% drop. The speaker acknowledges there are reasons behind the selling with concerns and anxieties, and Google experienced one of its most negative days in history.
The speaker put himself in a position he believes he can handle, with probability of winning greater than losing. This does not need to make sense to others. The goal is not to convince viewers to take the same positions, but to see them profit by choosing companies meeting their criteria with appropriate risk-to-reward ratios. There is no confirmation of trend reversal yet, making early buying riskier, which can be avoided through patience.
A live stream is planned before market close to watch Amazon's earnings announcement, with a request to press the like button. Amazon, SanDisk, and Intel earnings will be covered in today's live session. Viewers are encouraged to like and subscribe for daily live trading every morning, particularly beneficial for complete beginners. The LPP team link in the description offers lifetime access for approximately $1.30 per day with a one-time payment, available before the October sale ends.
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