In such a situation it can be tempting to dive into the market and start buying straight away. But is that wise as a way to try and build wealth?

Real cheapness is objective, not subjective

Especially at a moment like this when the markets are so turbulent, it pays to remember what we are really talking about when we discuss cheap shares.

Just because a stock price has fallen does not mean it cannot keep falling. Some shares tumble and look really cheap – but then just keep on heading down.

Look at the share price charts for Ocado, Aston Martin, or Diageo over the past few years (to mention just a few).

There were multiple occasions when each may have looked like a bargain compared to what they cost before – yet still went on to head further southwards.

The issue here is that cheapness is not subjective. Just because something costs less than it did before does not in itself make it cheap.

Instead, I see cheapness (and value) as objective.

Am I paying less for something than I think it is worth, when factoring in the opportunity cost of tying up my money in it and also allowing myself a margin of safety when valuing it?

As billionaire Warren Buffett says, price is what you pay, but value is what you get.

This market contains bargains – and value traps

So, I am not in a rush to invest just because markets have been heading downwards in recent weeks.

Current geopolitical stability and its effect on oil prices and inflation are wreaking havoc for some businesses. Indeed, that has already shown up in recent announcements from companies whose trade might seem to be a long way from the Middle Eastern oil markets, like pub owner J D Wetherspoon.

What might that mean for investors? Some shares that look cheap right now might end up being value traps depending on what happens to the economy in coming months.

But others could end up looking like real bargains.

I am not waiting to see whether prices fall further. Instead, when looking for shares to buy, I ask myself the same question I always do: can I buy into what I see as a great business at an attractive price?

I’m hanging onto what I think is a bargain

For example, one share I thought was a bargain when I bought it a few months ago is yoga apparel retailer Lululemon Athletica (NASDAQ: LULU).

After I bought, it moved up and I was sitting on a paper profit. But the share has sunk again and my position is now worth less than what I paid for it. Still, I have no plans to sell as I think Lululemon remains a potential long-term bargain.

A weak economy and lower consumer confidence could hurt discretionary spending. Lululemon’s North American business was already struggling to keep up with fashion trends, so the firm faces multiple risks right now.

Long term, though, its strong brand, reputation for product quality (with the odd well-publicised slip), and large customer base are strengths. Plus, it is growing international sales strongly.

The post Load up on cheap shares now – or wait to see whether they get even cheaper? appeared first on The Motley Fool UK.

The billionaire investor is not stepping down altogether: he will remain as chairman.

But, as he has handed over his day-to-day executive responsibilities, it seems like a good moment to reflect on whether the sort of techniques Warren Buffett has used to accumulate billions of pounds in the stock market may still have relevance for an investor today.

A lot has changed in Buffett’s time

Warren Buffett became the boss at Berkshire for some six decades. That was not even the start of his investing career: before that he had run his own investment partnership.

A lot has changed in that time.

Early on in his career, Buffett was able to buy many shares for less than their net asset value, partly because limited information meant many investors did not know about that discrepancy.

Shares selling below net asset value today are far less plentiful than they were back then. However, there are still plenty about, including Scottish Mortgage Investment Trust and many UK funds in the renewable energy sector, among others.

But the huge information gaps that once existed have got far rarer. Rather than needing to go to a library and scour detailed financial reports, even a small private investor can now find out huge amounts of information at the tap of a finger, for free.

If anything, though, I see that as a positive thing for small private investors.

Even with just a little to invest, I can now access much of the same information that huge, sophisticated investors can.

The value-based approach still works

While some things have changed, Warren Buffett’s investing style has remained largely the same for decades.

Put simply, he is a value investor. However, that does not mean simply that he looks for shares to buy that sell for less than their net asset value, or have fallen sharply.

Instead, he tries to find what he regards as brilliant businesses in terms of their long-term spare cash generation potential.

Once he finds them, if he can buy at what he thinks is an attractive share price, he aims to do so with a view to holding the share for the long term.

Some of Buffett’s most lucrative investments have come in just the past few years, such as Berkshire’s stake in Apple.

They have been made using that approach. I think it still works.

One share to consider for 2026

Using such Warren Buffett principles, one share I think investors should consider for 2026 is one I have been buying in recent months: Lululemon Athletica (NASDAQ: LULU).

Buffett likes consumer-facing brands with strong franchises and ongoing sales. He likes a business model that is simple to understand and profitable. He also likes companies that have strong pricing power.

Lululemon has all of those. So, why did the Lululemon share price almost halve over the course of last year?

The company has been struggling with sales in North America. Rivals like Alo are eating into its business and Lululemon’s range has not stayed current enough.

But I think those problems are fixable – and see huge international growth opportunities, too.

The post Warren Buffett has retired. Could his investing approach still work today? appeared first on The Motley Fool UK.

We have certainly seen some bumps along the way this year, including a stock market correction in April following unexpected shifts in US tariff policy.

But so far, 2025 has seen the stock market perform strongly.

The FTSE 100 has repeatedly hit new all-times highs. It is up 17% so far this year.

Stateside, the S&P 500 is up by the same amount – and last week broke its all-time record level.

Can that momentum carry on into 2026?

An uncertain reckoning

I think it can do. Whether it will, however, remains to be seen.

That might sound like I am sitting on the fence. But I think there is a justifiable argument on both sides of that fence.

The idea of further gains can make sense given what we have seen this year – strong stock market performance even within the context of a fairly modest economic performance overall.

If 2026 sees key economies like the US return to strong growth, that could give the stock market further impetus, in my view.

From a glass half empty perspective though, perhaps that strong stock market performance this year unaccompanied by a similarly robust economic performance could mean that the market’s valuation is getting harder to justify.

Added to that is the risk that the huge AI-related boom we have seen in some leading stocks this year is simply unsustainable.

Looking for individual bargains

Time will tell.

To some extent, what happens to the wider market is not critical for me anyway, as I am not investing in the market as a whole.

Rather than, say, putting money into an index tracker fund, I prefer on approach based on owning a suitably diversified portfolio of individual shares.

Why do I like this approach of buying individual shares?

Buying individual shares lets me try and filter out what I see as bad shares that might exert a downward drag on the performance of the market overall.

Instead, I can focus on situations where I see a mismatch between what I think is a brilliant business and how the stock market currently values it.

Down 47%, but I like it!

As an example, one share I have been buying repeatedly this year is Lululemon Athletica (NASDAQ: LULU).

Its shares jumped at the end of last week on news that the chief executive will step down.

When a share jumps because the boss is going to leave, that is often a sign of shareholder frustration (and relief)! Even after that jump though, the Lululemon share price is still 47% lower than it was at the start of the year.

That reflects weakening sales in the company’s key North American market. Growing competition from rivals like Alo and the threat of falling disposable incomes mean the pricey yoga outfit maker needs to sort out its North American performance as soon as possible.

But its global business is growing fast — and has lots more growth opportunities. The Lululemon brand remains strong and gives the company a lot of pricing power.

From a long-term perspective, I see its current stock market valuation as a potential bargain.

The post Can the stock market continue its strong performance into 2026? appeared first on The Motley Fool UK.

That, incidentally, is the same growth we have seen on this side of the pond for the FTSE 100 so far this year. So, the index of leading British shares were valued lower than its US counterpart at the beginning of the year and that remains the case.

The S&P 500’s performance this year is impressive, especially considering the context. We have seen ongoing geopolitical uncertainty, significant and unpredictable shifts in US trade policy, and growing signs of weakening consumer demand in the US economy.

Yet the S&P 500 powers on. In recent days it has been edging closer to setting a new all-time high.

So, should I invest, for example by putting some money into an S&P 500 tracker fund?

I’m getting nervous about some valuations

I do not plan to.

There are several reasons for that.  One is my general preference to invest in carefully chosen individual shares rather than tracker funds.

Another factor is my concern about the valuation of many leading US stocks. To me some of them look unjustifiably high. That does not mean that they will not still go higher. The index may keep climbing in 2026 if investor sentiment remains positive, as it has been lately.

However, I am always nervous about buying a share if I think its current valuation looks too high to justify.

Nvidia sells for 45 times earnings, for example. I like the company’s proven business model and massive profitability, but that valuation looks high to me given risks like a slowdown in AI data centre spending at some point in future.

Yet that valuation is at least one I can get my head around, even if it is beyond my comfort zone.

By contrast, Palantir has a price-to-earnings ratio of 733. This is not some tiddler, but a firm with a $424bn market capitalisation.

Even what is basically a second-hand car dealer (and loan provider) – Carvana – has a market cap of $87bn and P/E ratio of 91.

On the hunt for bargains

Do such valuations mean I have lost interest in the S&P 500?

Not at all – I continue to look for individual bargains within it.

For example, one S&P 500 share that has had a bad 2025 so far is Lululemon Athletica (NASDAQ: LULU).

The yoga retailer has seen its share price drop by 52% since the start of the year. That must be painful even for people trained in having flexibility and a calm mind!

My response to the price fall has been to load up on the shares.

Lululemon’s troubles reflect some of the wider challenges I mentioned above.

Tariffs have eaten into its profitability. The company’s key US market has seen demand fall. Price-conscious shoppers have compared the company’s slow-changing core range to rivals like Alo and some have found it wanting.

But Lululemon has recognised this challenge in the US and is actively addressing it. Meanwhile, it maintains a strong brand and large following.

Internationally, it continues to grow healthily and I see non-US sales as a huge ongoing growth opportunity.

The post Up 17% in 2025, can the S&P 500 power on into 2026? appeared first on The Motley Fool UK.

The end of the calendar year is a popular time for fund managers to make strategic portfolio moves. And this is something long-term retail investors can benefit from — if they know where to look.

December sales

In Warren Buffett’s words, what creates opportunities in the stock market is other people doing dumb things. And December can be an especially good time for that kind of thing.

At the end of the year, fund managers have strong incentives to sell underperforming stocks – regardless of what they think of their long-term prospects. And this can create opportunities. 

One reason is tax. Selling something that’s down and realising a loss can reduce the amount of tax an institution has to pay on its winners, which can boost the firm’s overall returns.

Another is marketing. When clients are deciding what to do with their finances in January, nobody wants to show them they’ve been holding something all year that’s down 70%.

Institutions obviously can’t commit fraud or mislead investors. But they can legally sell stocks that are down to reduce their tax liabilities and make themselves more attractive. 

Retail investors, however, don’t have to worry about these things. So additional pressure on shares that are already cheap can be a good place to look for buying opportunities.

An example

A good example is Lululemon Athletica (NASDAQ:LULU). The stock is down 52% in the last 12 months (and 48% over the last five years). 

A lot of the decline, however, is a result of valuation multiples contracting. The stock was trading at a price-to-earnings (P/E) ratio of 22 at the start of the year (and 86 back in 2020). 

There are some signs of weakness in the underlying business – sales growth has just started to turn negative. And this does highlight an important set of risks with the company. 

Switching costs for customers are virtually zero, so there’s always a risk of competition. On top of this, there’s a danger of consumers going away entirely when things are tight.

That’s why the stock is down, but there’s a lot to like about the business. It has a strong brand, its financial position looks good, and that makes it well worth considering at the right price.

At a P/E ratio of 12, it looks interesting. But if the stock falls another 10% in December – and there are good reasons to think this is possible – it might become too cheap for me to ignore.

Value investing

I’m not saying investors should buy stocks just because they’re down. That’s a recipe for finding value traps instead of good opportunities. 

I do think, though, that the end of the year can create some interesting opportunities. Fund managers aren’t stupid, but they are incentivised in a certain way and this is worth keeping in mind.

Could something like this cause me to buy Lululemon shares before the end of the year? Potentially – but there are a number of other names that are also jumping out at me right now.

The post Don’t wait for a stock market crash! Here’s where I’m looking for shares to buy in December appeared first on The Motley Fool UK.

I think the answer is yes. After all, that is precisely what long-term investing is all about.

The US stock in question is yoga wear retailer Lululemon Athletica (NASDAQ: LULU).

I bought into the company following a September profit warning that had come hot on the heels of an earlier warning in June.

The price looks cheap. Is it?

The US stock market does not like nasty surprises, especially when they start to pile up.

So it is no surprise that the Lululemon stock price has crashed 56% so far this year. Ouch. Even for a yogi, that could be difficult to accept while maintaining calm breathing!

Now selling for 12 times earnings, Lululemon looks like a classic turnaround value stock.

For one thing, as earnings are set to fall, the valuation is less attractive than that current price-to-earnings (P/E) ratio of 12 may seem to suggest.

The prospective P/E ratio already looks much higher, even without factoring in any further potential disappointments from the apparel firm.

Terminal decline, or fixable missteps?

On top of that, turnarounds can be tricky.

Sometimes a company has made a few bad moves and can fix them. Lululemon reckons it has misjudged the length of fashion cycles. By clearing existing inventory and introducing new product lines faster, that sounds easily fixable.

But sometimes problems are more intractable.

Tariffs certainly have not helped Lululemon’s business. But it also faces risks in the form of newer competitors and a soft economy reducing some shoppers’ willingness to splash out on pricy gymwear.

Is Lululemon fixable? Or will it turn out to be a value trap? Only time will tell.

Here’s what I’m hoping

Still, I was happy to invest in September. If I have spare cash in November and think the Lululemon stock price is still attractive, I plan to buy more shares.

I think the company’s brand and loyal customer base is still a strong asset and can be the basis for a turnaround.

On top of that, I see the real opportunity for Lululemon in the coming decade as being international expansion.

While the company is wrestling with challenges in the US, it is doing a roaring trade overseas. I expect that to continue, as there is still a massive and largely untapped opportunity internationally for the brand.

The post I plan to buy more of this US stock in November. Here’s why! appeared first on The Motley Fool UK.

The premium sports apparel brand has encountered numerous challenges throughout 2025, including slower growth, softening demand, tariff disruptions, and rising competition — all simultaneously. And consequently, the stock’s down a painful 60% since February – its lowest level since 2019.

Yet, with the once-loved growth stock now trading for a price-to-earnings ratio of just 11.5, could it now secretly be a terrific buying opportunity?

Comeback potential

Despite all the disruptive forces surrounding this business, there’s cause for some optimism. The company’s international expansion into markets like China appears to be going well. And with its brand seemingly resonating with non-US customers, it opens the door to a much broader sales opportunity versus the more saturated North American market.

At the same time, Lululemon has several upcoming product launches that might help reinvigorate demand from its core customer base – something that may also be supported by its new partnership with American Express. The latter involves offering co-branded credit cards and exclusive offers to help drive repeat purchases with typically more affluent consumers.

There’s no denying a successful rebound will require good execution – something often far easier said than done. But at today’s valuation, that might be a risk worth taking. Of course, there are other factors to consider as well.

What could go wrong?

The landscape for this apparel brand has always been competitive. But the heat seems to be ramping up.

The group’s product reputation largely revolves around yoga and athleisure clothing, with younger women making up most of its customer base. Yet it seems rival brands like Alo and Vuori are starting to encroach on its territory with directly competing products that are seemingly resonating well with Lululemon’s core audience.

Needless to say, losing engagement from customers to alternative brands is a serious problem. And while management’s attempting to address this through product innovation, it’s too soon to tell whether this strategy’s working.

The bottom line

If management’s able to right the ship and get customers excited for its products once again, the recovery potential of this S&P 500 stock could be substantial. This is especially true considering how cheaply the shares are seemingly trading compared to their historical price levels.

However, delivering such a turnaround is no easy feat. And we’ve already seen this first-hand with other once-thriving sports/fashion brands such as Under Armour.

It goes to show that succeeding in this space is exceptionally difficult. And while I remain cautiously optimistic about the future of Lululemon shares, I’m not willing to put any money behind it right now. That’s why, despite the cheap valuation, I’m not rushing to buy shares today.

But it’s definitely a business worth watching closely moving forward.

The post Down 60% this S&P 500 growth stock just hit a new more-than-5-year low! appeared first on The Motley Fool UK.

Buffett’s track record of value creation at Berkshire has been remarkable.

Looking at it, it is easy to think that Buffett benefited from investing in times when there were much greater potential rewards available than today.

But is that true?

Information asymmetries have reduced

In Buffett’s early career, he was able to make some very easy money trading obscure shares in some cases because most people did not know the real value of what they had on their balance sheet.

That is theoretically possible today, but in developed markets like the UK or US it is far less likely than it once was.

The explosion of free information, instantly available, has ended some of those former lucrative opportunities.

Looked at another way, though, I see that as an opportunity for small investors!

Up-to-date share price information and access to thousands of company accounts instantly was once largely the preserve of big financial firms – and they had to pay prettily for the privilege. Now someone using their phone on the train can access much of the same information as a financial professional, for free.

Making sense of large amounts of data

Still, having the raw information is only one part of the equation. Where Warren Buffett has excelled is in understanding how to spot an opportunity by interpreting such information.

That remains as powerful a skill as ever. As companies like Nvidia and Tesla have demonstrated over the past decade, today’s stock market continues to offer up the sort of brilliant investing opportunities that Warren Buffett started seizing profitably decades ago.

The advantage of having little money to invest

The long wait for this week’s announcement of a new acquisition by Berkshire demonstrates a challenge Warren Buffett has. With Berkshire’s huge cash pile, it takes sizeable deals to move the needle.

Indeed, he has often lamented that he thinks he could achieve much better returns if he was once again investing with the far more modest sums of his early days in the stock market. That is music to the ears of a small private investor like myself with only a small amount to invest.

Applying Buffett’s approach

I continue to apply some Warren Buffett principles in putting that money to work.

For example, I recently purchased shares in Lululemon Athletica (NASDAQ: LULU). Buffett is always optimistic about the long-term prospects of the American economy, but that is exactly the market where the yogawear maker has been struggling. There is a risk that could continue to act as a drag on sales, as consumers tighten their belts.

But Buffett loves a strong brand – and Lululemon is just that. It has a large customer base, pricing power, and a unique positioning in its market.

I think management recognises how it can get North American sales back on track. Meanwhile, international expansion continues to offer sizeable opportunities for the long term.

At its current price, I see Lululemon as a great company selling at an attractive price – which is why I’ve been buying!

The post Could a small investor today match the historic returns of Warren Buffett? appeared first on The Motley Fool UK.

Here they are.

Long-term growth story

Two of the shares are UK companies I think have strong long-term business growth prospects.

One was new to my SIPP — Anpario (LSE: ANP).

The company makes animal feed additives. Going back a few years, Dechra Pharmaceuticals was a great stock market success story before being taken private.

Dechra’s price ended up being too high for me to invest, but I continue to like the economics of animal nutrition. Customers are willing to pay to keep livestock healthy and demand is resilient.

Anpario shares are up 28% in five years, but have more than doubled since September 2023.

Interim results this month showed year-on-year sales growth of 34% and a 62% jump in pre-tax profit. The US business performed much better than it had been doing but an uncertain market outlook there remains a risk.

Full steam ahead

Another share I already owned in my SIPP but bought more of this month is Journeo (LSE: JNEO).

I thought its interim results this month showed strong growth prospects. But the market sent the Journeo share price down sharply, perhaps because of a slight fall in revenues.

With both selling for 17 times earnings, neither Anpario nor Journeo may look obviously cheap. But, like Anpario’s sharply stronger profits, I am hopeful that Journeo can turn a strong sales pipeline and growing list of contract wins into higher earnings.

A recent acquisition should help boost earnings in coming years and I think Journeo’s focus on public transport products and services puts it in line to benefit from strong spending on this area in both the UK and other European markets.

But integrating an acquisition is never easy and can distract management. Notwithstanding that risk, I think the Journeo share price – up 880% in five years – may hopefully still have further to run.

Retailers with work to do

Two other shares I bought for my SIPP are very different retailers, with the same challenge — keeping sales growing.

B&M has seen its share price tumble 26% so far this year. Recent weakness in fast-moving consumer goods sales is a concern, but I see the profitable business as being in strong underlying condition.

I bought some more B&M shares for my SIPP this month – and the company’s chief executive has also been spending on the shares.

The other retailer may seem worlds away from B&M — on-trend yoga outfit hotspot Lululemon Athletica (NASDAQ: LULU).

Not trendy enough though. Lululemon’s profit warning this month pointed to tired product lines in its key North American market meanings some shoppers are looking elsewhere.

But a 54% fall in the Lululemon share price so far this year looks overdone to me.

The company has a powerful brand, large customer base, attractive profit margins and extensive international growth opportunities.

Management is candid about the work to be done in the firm’s North American business. Meanwhile, overseas sales look set to keep growing strongly.

On a price-to-earnings ratio of 12, Lululemon shares look cheap to me.          

The post 4 shares I bought for my SIPP this month appeared first on The Motley Fool UK.

That share was sportswear retailer Lululemon Athletica (NASDAQ: LULU). Investors seemed to be fearful after the company issued a profit warning last week.

The Lululemon share price fell sharply after that and is now 57% lower than at the start of 2025. To me, that looks like it might turn out to be a terrific bargain over the long term.

Not for the impatient

At face value, the current valuation looks cheap. The price-to-earnings ratio is just 11, for a company with a loyal fanbase and impressive pricing power. Last year, for example, Lululemon’s net profit margin was 17%.

But the prospective price-to-earnings ratio is likely well above 11, as the company’s earnings look set to fall.

The retailer has seen enthusiasm among its key North American customer base fall. Comparable sales in the Americas for the second quarter fell 4%. Lululemon also announced an expected $240m hit to full-year gross profit due to US tariff and import rule changes, even after taking actions like raising prices and pushing manufacturers for lower costs.

With the US economy looking fairly weak, consumers might delay splashing out on its pricy core yoga gear. One fear a lot of investors seem to have is that things may get worse at Lululemon before they get better.

Profit warnings sometimes follow one another in fairly rapid succession (UK-based sportswear retailer JD Sports has demonstrated that over the past couple of years).

I see a potential opportunity

I accept that, as I am a believer in long-term investing. But I decided to add Lululemon shares to my SIPP because of its long-term business model and short-term management actions.

Management’s response to the disappointing second results had candour. The company recognises that it has been lacking sufficient newness is some of its product ranges in North America and plans to fix that.

That sounds simple but could already go a long way to stemming the revenue decline in the Americas, in my opinion.

What really excites me about Lululemon though, is not the immediate fixes but the longer-term growth story.

Strong international sales momentum

While comparable sales in the Americas fell in the second quarter compared to the prior year period, net revenue for that region actually inched up as Lululemon has been opening stores.

Meanwhile, international net revenue grew by more than a fifth year-on-year. While Americans may be showing some signs of fatigue, international consumers clearly still cannot get enough of Lululemon.

The company has a strong brand, limited large-scale competition with a yoga focus, proven business model and strong economics. It remains solidly profitable despite the profit warning and is sitting on over $1bn of cash and cash equivalents.

In coming months and perhaps years, Lululemon shares may move even lower. Over the long term though, I am optimistic the growth story combined with current share price make this a smart buy for my SIPP.

The post I just bought this beaten-down share for my SIPP. Could it be a terrific bargain? appeared first on The Motley Fool UK.