The Market Corrected, Now What?

How to Buy Low, Sell High, and Make Smarter Investment Decisions

Mar 23, 2025

Markets corrected - Here’s how to take advantage, and avoid panic selling

Rotating capital strategically - I sold overvalued positions like BERY & CVS and deployed capital into undervalued opportunities like JACK, SBH, and NVDA

Structuring a 43% return in NVDA - A high-probability trade that maximizes upside while ensuring an attractive downside scenario

Buy low, sell high, and definitely do not sell low. I heard an interesting stat from the Barron’s Streetwise podcast last week, it went something like, the typical investor underperforms their own investments by 4%. Essentially, human nature makes us more inclined to buy when the market is going up, and sell when it’s going down. Once you overcome this, you’ll find yourself making more rational investment decisions (and returns).

A Simple Valuation Checklist for Smarter Investing

I invest primarily based on valuation. The basic checklist:

Is a stock trading at a historically low valuation?

Is the company consistently profitable over the last 10 years?

Are profits expected to continue?

Does the management team reward shareholders or invest back into the business efficiently?

It’s a simple checklist, and takes around 30 minutes to check off most of the important items. Given the recent correction, I took action capitalizing on the opportunities I was patiently waiting for. I had a few positions which held strong and were trading near record high valuations like BERY & CVS. I fully liquidated these, locked in gains and redeployed my investing capital into other positions which were drastically sold off based on broad market movements rather than company specific results.

Selling High: Cashing Out Overvalued Stocks

BERY currently trades at 11.3x 2025’s projected EPS. A quick glance at my chart below shows BERY topped out between 9-13x EPS in each of the last 4 years, while trading as low as 6-8x. At the current valuation, 11.3x EPS & $70.81, I know for a fact I’m selling high as it’s well above the average peak of 10x. This is super easy to check for yourself on your own positions before buying & selling.

CVS is in a similar position, not as high relatively as BERY, but much higher than other opportunities I’d like to pursue. It’s currently trading at 16x 2025 EPS, just below its 5 year median high of 18x. In 2020 & 2023, CVS only reached highs of 14x earnings, so I’m getting a better valuation today than even the best timed sells in those two years. CVS chart below:

Just like that, you can make an extremely informed decision based on historical data to effectively choose when to sell your stock. For every seller, there is a buyer, and it’s likely the buyers on the other end of my trades are buying high and selling low. There is no way of knowing what the person on the other end is thinking, however, I rest easily knowing I made an informed decision.

Buying Low: Capitalizing on Market Overreaction

The recent broad sell off and volatility created great opportunities for buying & selling puts, specifically on JACK, SBH & NVDA. Feel free to check my linked previous articles. Right now, with a market correction in play, those put premiums are significantly higher than usual. That’s exactly why I’m stepping in to sell puts: I can pocket higher income from the elevated premiums while the market bounces around. Of course, that doesn’t eliminate risk altogether, but it does mean I’m getting paid more for taking on a long position in a volatile environment. Selling a put and buying shares outright reward you in the same way, you generate returns when the stock appreciates.

NVDA: A Rare Buying Opportunity

If you felt like you missed out on NVDA, I have great news for you. You can buy NVDA today for a lower price than the lowest purchase in 2021 & 2022. I write about the recent downturn and the current long-term opportunity more in my recent article: NVIDIA: A Generational Investment with Asymmetric Upside. For today, I’ll show how I added to my large position consisting of shares and puts with even more puts.

See below for my chart showing NVDA trading at just 27.8x 2025 EPS compared to the historically low median of 23x. Also consider the extreme highs NVDA consistently trades at. Even matching the lowest high valuation from 2023, 42x earnings, would generate a 51% return from here or a price target of $178.

Locking in a 43% Return in Under Two Years

This trade projects a 43% return with a 15% breakeven point if NVDA simply rises about 21% over the next two years. I sold NVDA puts for January 15, 2027 at $140 strike for $41.85/contract. This equates to an immediate cash inflow of $4,185/contract. I’m expecting NVDA to reach at least $140 or about a 20% increase from today within the next two years to realize this premium. I mentioned above, NVDA will likely reach at least $178 in 2025 if it matches its lowest peak valuation from the last 4 years. You’ll see in my full write up on NVDA why $140 is incredibly conservative and highly likely to hit.

Why This Trade is a Win-Win

If all goes as expected and NVDA is trading at $140 or higher in January of 2027, the following would play out:

If stock closes at $140 or higher, a 21% increase from today

The Puts will expire worthless & I’ll keep the $4,185

Final Position = No Shares + $4,185

Cash on Cash Net Profit = $4,185

Total Return = 43% or $4,185/$9,815 Kept as collateral to secure the put

Annualized Return = 23% (over 682 days from execution)

If NVDA traded below $140, the following would play out:

The Puts will be exercised

You'll have to buy 100 shares

You will need $14,000 cash to cover the 100 shares

You keep the initial $4,185 premium to offset the cash required

Final Position = 100 shares

Start-to-Finish Net Cash Outlay = -$9,815

Average Cost = $98.15 ($9,815/100 Shares)

Stock could fall 15% per share to breakeven

To summarize, I’ll likely realize a 23% or higher annualized return (higher if NVDA climbs to $140 sooner than 2027 and I close the position early). In the event NVDA fails to reach $140, I’ll purchase shares at a net price of $98.15. That price would represent just 18x 2027’s expected EPS. At 18x earnings I’d own NVDA at a historically low valuation. Any price above $98.15, and I could liquidate immediately for profit.

Final Thoughts: Strategy and Discipline Win the Market

I setup similar trades for JACK & SBH, both trading at historical lows and meeting my checklist items listed at the beginning of the article. All 3 of these companies are great opportunities to own the shares outright or sell long-dated puts. I already own significant amounts of shares for each, and require cash for an upcoming real estate investment. Selling puts allows me to take long positions on these undervalued companies while preserving and generating cash to meet my short & long term goals. Always ensure you have ample cash to cover puts, and your investment obligations. Check out my write ups on JACK, SBH & NVDA for additional insight, methodology and investment ideas. Please share the article if you found it useful, and feel free to let me know what you’re up to in the comments or by email.

Valuology

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