3 Strategies to Turn Netflix into the Buy of the Century

By TradeSmith Research Team

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My friend and colleague TradeSmith CEO Keith Kaplan is a huge fan of “Stranger Things,” the wildly popular Netflix Inc. (NFLX) series about a group of kids who discover a supernatural secret hidden in their small town of Hawkins, Indiana. It’s called the “Upside Down” world, and I have to say that ever since I heard about it, I’ve been captivated.

The “Upside Down” is an alternate dimension that exists alongside the characters’ “real world.” Devoid of human life and positive emotions, and with monsters lurking around every corner, it’s somewhere you want to leave as quickly as possible.

But even though you want to leave and didn’t ask to be there, you can get stuck.

A mental lightbulb started to spark… and I realized that this is the perfect analogy for Netflix.

Right now, Netflix is stuck in the “Upside Down” world.

It’s an unpleasant reality that shareholders are trapped in, especially those who may still be holding on to shares they bought for $700. For anyone who wants to invest but hasn’t — no one wants to try to catch a falling knife, as the stock could keep sliding.

Here’s a quick look at Netflix’s unpleasant reality:

  • The Netflix stock price has plummeted 63% this year.
  • It lost nearly 1 million subscribers in its latest quarter.
  • And password sharing could be leading to an estimated 45% of all Netflix watchers using the platform for free.
But if you can look past the “Upside Down” world, you’ll see that another reality exists at the same time — and it’s that Netflix is the buy of a lifetime.


Even trapped in a negative reality, there are plenty of reasons to still like this company.

In 2021, for the first time in the company’s history, Netflix won more Emmys (44) than any other network. That’s huge validation for excellence in the television industry.

It also had six of the 10 most searched for shows in 2021.

And Netflix still has the largest number of monthly active users in the U.S.

To put it simply, this is a giant that won’t be dethroned easily.

On the technical side, there are signals telling me this stock is going to be one you can eventually brag to your grandkids about owning.

Now, when I say that, I’m not telling you to open up your brokerage account as fast as possible and hit the “buy” button on NFLX.

Instead, what I want to offer are three strategies/tools that you can use to limit your risk and reap the max rewards when investing in NFLX for the long term.

Netflix Investment Strategy No. 1: Dollar-Cost Averaging

One mistake investors can make is buying shares all at once.

For example, if you buy a stock at $20 and it falls to $10, you have to wait for it to climb back to $20 just to break even.

However, if you buy the stock in increments, let’s say at $10 and then at $20, then your average cost is only $15.

If the stock price drops to $10 but your average cost is $15, the stock only has to climb back to $15 for you to break even; when it climbs past $15, you have a profit.

The Netflix stock price could always go lower, but over the last month, it has climbed more than 20%.

That’s why, depending on your risk tolerance and belief in the company, you may find dollar-cost averaging to be an effective way to buy Netflix stock.

You can buy a set amount of shares each week, month, or quarter, and depending on your brokerage account, you can set up automatic investments.

That way, you can limit your downside and still have upside for when the stock price starts to climb.

Netflix Investment Strategy No. 2: TradeSmith Tools

One of the most important things to do is be honest with yourself as an investor, and that involves realizing it’s difficult to take the emotion out of investing.

The good news is, TradeSmith was created to do that for you.

In our Health Indicator (you can think of this as a traffic light), Netflix is in the Red Zone.

It’s also High Risk according to our Volatility Quotient (VQ).

Volatility Quotient Level Breakdown:

  • Up to 15% = Low Risk
  • 15%-30% = Medium Risk
  • 30%-50% = High Risk
  • 50% and above = Sky-High Risk
What folks can do is create a watchlist and pounce on NFLX when it enters the Green Zone.

This is especially powerful if you always feel you are trying to time the market and never get it right.

This takes the headache away.

Finally, there’s a third way to invest in Netflix that requires a minimal investment but can still provide outsized gains.

Netflix Investment Strategy No. 3: Alt Shares

Instead of simply buying shares of Netflix outright, there’s a better way to capitalize on this opportunity — “alt shares.”

Look, inflation just reached 9.1%, everyone is worrying about a recession, and it’s not going to get any easier to know how to invest anytime soon.

With the market strapped into a roller coaster ride with no end in sight, you need a strategy that gives you the potential for low-cost, lower-risk, and high-return investment alternatives to plain old stocks and bonds.

Alt shares are a favorite of mine right now. My own investment portfolio includes dozens of alt-share positions.

With this strategy, I skip over the conservative dividend payers and look at growth stocks that have “double-your-money” potential. Then I look for “alt-share” ways to play those stocks… and alt shares are at fire sale prices right now.

The funny thing is, I even had to scratch my head and take some time to think about the last time I’ve seen alt shares trading at levels this low — it’s been at least 10 years, if not more.

This is my single-favorite bear-market strategy, as you can set yourself up for 400%, 500%, and 600% gains and still have much lower levels of risk.

In your portfolio right now, just take a look at the companies that haven’t done much for you over a long stretch. If you put a tiny bit of your money to work in alt shares instead, just imagine the windfalls you could reap.

I’m pounding the table on this because I can’t say when we’ll see this kind of a major wealth window again.

In fact, check out my “Calendar Reminder” note at the bottom, because I have a special event planned.