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☕ A quick trick if "expensive" stocks scare you

Jan 15, 2024

Howdy! 👋

The markets are closed in celebration of Martin Luther King Jr. Day, so I thought we’d take a moment to talk about something making the rounds lately.

The notion that certain stocks like – ahem – TSLA and NVDA – are expensive.

The presumption or at least the read between the lines implication is that “who in their right minds” would buy more?

Yours truly.

People have said the same dang thing about Apple, Microsoft, Amazon, and dozens of other top-tier stocks over the years. Yet, they’ve all become considerably more valuable over time.

That’s how the markets work.

Shares of great companies always trade at a premium. What’s more, quality wins every time over time, especially when we’re talking tech and innovation.

The real problem when it comes to stocks like TSLA and NVDA isn’t that the stocks are “expensive” or “over bought” or even “extended.”

They’re just pricier.

My experience is that it’s the fear of loss that causes most people go off the rails in situations like this.

Let me explain.

Losing 10% on Tesla at $218.89 a share works out to $21.89 per share – ouch. Losing 10% on Nvidia at $547.10 a share translates into a $54.71 buzzcut – zowie. But losing 10% on a $20 stock is just $2. Pffft.

That’s really the rub.

The “stocks are expensive” crowd constantly seems to base their argument on extrapolation which is why it seems so scary. But that’s a lot like running out to buy a snow shovel in April because you get 2 inches of the fluffy stuff and think there will be 18 feet on the ground in July.

Here’s a quick trick I learned a long time ago that helps me keep things in perspective.

It’s goofy but it helps.

First, divide the share price of whatever stock has ya’ concerned by 10. This forces you to disengage your fear gland while opening the “bargain basement” side of your brain.

For instance, Telsa’s $218.89 a share right now which, divided by 10, is just $21.89 per share. Nvidia’s $547.10 which, divided by 10, is just $54.71 per share.

Assuming both of those “calculations” aren’t game stoppers, the next question is would you buy TSLA at $21.89 a share or NVDA at $54.71?

Me, too.

Probably all day long. (Watch)


Because suddenly the 10% decline in prices that has many up in arms at the higher prices everybody’s talking about just isn’t a big deal.

Discipline, not distraction.

See you in the morning when, as always, we’ll MAKE it another great day together!

Thanks for being part of the 5 with Fitz Family.

You got this!

Keith 😊

Straight to your inbox from Keith himself!

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