Buy Your Car Like You Buy a Stock

Your car is not an investment...

A car may be a necessity. But it's a depreciating asset. In most cases, it's a tool that you buy for a purpose, and its value dwindles away as you use it.

Still, when you buy a car, you can save money by applying the lessons you learned from your stock investing... and vice versa.

I (Brady Holt) live in both worlds... I'm a managing editor at Stansberry Research, where I help produce our world-class investing advice. But I also spend my time testing and reviewing the latest car models.

And there's a valuable piece of advice that applies when you buy a car or buy a stock...

Get an edge over the market.

Here's what I mean...

When Doc Eifrig or another Stansberry Research editor recommends a stock, they've often figured out something that the market is missing.

Maybe Wall Street turned bearish on a given sector, sparking a sell-off even in strong stocks.

Perhaps an incredible company had a weak quarter that scared away investors.

Maybe everyone is so focused on companies with exciting change-the-world promises, they overlook the bigger long-term gains they can get with steady but humble businesses like, say, a termite exterminator or a paint store (to cite two of Doc's own recommendations).

These are factors that let you buy a stock at a discount.

Now, you don't need those factors to make money with stocks... In general, the stock market goes up. You can park your cash in a low-fee index fund and grow your wealth.

But if your goal is to beat the market or to make your money more safely, this is what you're looking for.

Like a stock investor buying an index fund, you can also make a safe, easy choice when buying a car... You don't need an edge over the market to buy a well-regarded bestseller, and odds are good that it'll get you where you need to go.

And as I've discussed before, you can also save a lot of money on your car purchase when you separate your wants from your needs and evaluate how much you're willing to pay for those wants.

But as with stocks, you'll get the most for your money when you find an edge...

With cars, that often means choosing solid cars with shaky reputations, flaws that don't bother you, or that nobody has heard of.

That means researching Hyundais and Kias instead of jumping straight into your seventh Honda or Toyota. It means looking into hatchbacks and sedans instead of the must-have SUVs. These differences are magnified when it comes to used cars. (On Thursday, I'll be back with a few specific examples of overlooked cars – both used and new – that are worth your attention.)

Now, here's an important caveat... Plenty of times, the market isn't wrong.

The stock market is made up of investors who are using most of the same data points and analysis to agree on a stock's value. They're not always right... But they've often arrived at a reasonable consensus about what a stock should cost. An expensive stock (meaning one that's richly valued based on its current revenue, earnings, or other factors) can still be the best value. A cheap stock is sometimes just trash.

And just like Bed Bath & Beyond (BBBY) stock wasn't a smart buy last month even at less than $1 per share, there's a reason a 10-year-old Jaguar XJ full-size luxury sedan costs just $15,000 today.

A BBBY "investment" is heading to zero with the company's recent bankruptcy announcement... And that sweet-looking Jag is selling for just 20% of its original price because it's a money pit.

When you're buying stocks, you can get this edge from reading the experts at Stansberry Research. When you're choosing a car, you can read car reviews (with your own needs in mind) and check reliability scores from Consumer Reports.

This is how you beat the market... You figure out why an asset is selling for a discount versus another, then exploit opportunities that seem worthwhile while making sure you don't fall for value traps. It's how you'll get the best deal on your stocks – and your car.

What We're Reading...

Here's to our health, wealth, and a great retirement,

Brady Holt with Dr. David Eifrig
May 2, 2023