How To Buy Stocks Nobody Wants - Without Blowing Up Your Portfolio

I am down roughly 30% on QXO (QXO) as I write this. That is not a fun sentence to type. And it is the only honest way to start a piece about buying stocks nobody wants, because every article you have ever read on this subject was written by somebody who already knew the ending. They pick a stock that bottomed. They draw a nice line at the low. They tell you to be brave. That's useless research, as it doesn't explain anything. So, I am doing it the other way around. After all, we aren't running a random investing newsletter here. I will show you one position that worked, Union Pacific (UNP), which I bought on weakness for more than three years in a sideways trend before the cycle finally turned. And one that has not worked yet, QXO, which sits in the red while I type. Same process. Two very different experiences. Only one of them has an ending so far. As many of you know, my entire approach rests on a simple idea. To make money, you have to buy good businesses when they are unloved. Everybody agrees with that in principle. Almost nobody does it, because "unloved" stops being an abstraction the moment it is in your own account. Then it is a number in red, a thesis you keep having to defend, and a quiet voice asking whether you are the only one who has not yet figured out what the rest of the market already knows. I don't like it, either. However, that is what buying weakness actually is. It's basically agreeing, out loud and with your own money, that everybody selling is making a mistake. That is the whole game. It is also why almost nobody, in general, does it well. There's just one problem with the standard advice to "buy quality on weakness." It skips the only two questions that actually matter. How do you know it is weakness and not decline? And how do you buy it without blowing yourself up when you are early? This piece is my attempt at both, as I spent the past few days thinking about ways to put it into writing. And, as this has turned into a pretty long and detailed piece, I suggest we get right to it! The Only Edge That Survives Let me start with the uncomfortable arithmetic. If you buy a stock everybody agrees is excellent, at a price everybody agrees is fair, you get roughly the return everybody expects. That is not a criticism. It is just math. Consensus is priced. You do not get paid a premium for holding the same opinion as the person on the other side of the trade. I know all about it, as I started my career (many years ago) buying stocks that everyone else liked, too. It just felt good. And if everyone agrees, it has to be a good investment, right? That's nonsense, and I'm sure most people reading this know that already. Excess return comes from one of three places: You know something others do not (rare, and usually illegal if true), You understand something others misread (the basis of most good research), or You are willing to hold something others cannot stomach. That third one is the durable edge. It requires no data advantage and no faster feed. It requires a temperament that most people, including professionals with career risk, do not have. "The time of maximum pessimism is the best time to buy." - Sir John Templeton Everybody agrees with that. Almost nobody acts on it, because maximum pessimism does not arrive with a label. It arrives as a stock down 30%, a sector everybody is calling structurally broken, and a chorus of smart-sounding people explaining why you are the sucker. I have been there plenty of times. Housing in 2026 is just one of many headwinds I've experienced. Buying energy in 2020 was almost worse. Or defense contractors in 2021/2022. Buying energy in 2025 wasn't fun, either. There are other examples, but you get the point. So this is not a piece about courage. Courage is a terrible investment process. Plenty of people were courageous in Wirecard. Remember that stock? The German fintech giant that everyone loved before it went bust and wiped out bill