It would be easy to justify steering clear of Walt Disney (DIS -3.26%) here. It was already a poor performer for the past few months, and Barclays just downgraded the stock on concerns that growth of its streaming platform Disney+ is slowing. Disney shares tumbled 3% on Monday on that one call. Given the setback, it's better to hedge your bet with something more broad-based, like an index-based fund meant to mirror the Dow Jones Industrial Average (^DJI -0.09%), which is just a basket of solid blue-chip stocks.

That line of thinking, however, oversimplifies what's happening with the overall market as well as Walt Disney right now. Not only is Disney's current weakness an entry opportunity, the overall market is still a little too overdue for a correction.

Why Walt Disney?

Barclays analyst Kannan Venkateshwar bluntly explains his downgrade from overweight to equal weight: "Disney+ growth has slowed significantly." He then puts his concern into perspective, noting: "In order to get to its long term streaming sub guide, Disney needs to more than double its current pace of growth to at least the same level as Netflix (NFLX -0.77%)." End result? Walt Disney's prior projections for 230 million to 260 million Disney+ subscribers by 2024 are now in question.

It was of course the last thing Disney shareholders wanted to hear. Already down 13% from March's peak, the stock fell further following Venkateshwar's comments. A lingering pandemic and just so-so box office numbers made it an even easier name to continue selling.

Chart showing rise in both Disney and the Dow Jones price since 2020.

DIS data by YCharts

Picking stocks can sometime be a funny business, though; the right call isn't always the obvious call. Stepping into quality stocks when they peel back -- even after tough headlines -- has actually been a rewarding long-term move. This instance is no exception.

Consider this: While Disney is clearly counting on major growth from Disney+ and its other on-demand services in a highly competitive streaming market, that's hardly all Disney does. Traditional television accounted for around a third of last quarter's revenue. Theme parks and hotels made up nearly one-fifth of last quarter's business.

And, while Disney+ is clearly the company's flagship streaming service, Hulu and ESPN+ aren't slouches either. Indeed, since Hulu's average monthly per-user subscription price of $13.15 (streaming only -- not its live cable TV option) is more than three times greater than the effective Disney+ rate of $4.16, Hulu is actually the bigger business of the two at this time. Hulu is also still growing robustly even if not as briskly as Disney+ is, upping its subscriber headcount by 22% year over year last quarter.

Here's another way of looking at it. Even at 250 million Disney+ subscribers paying $5.00 per month by 2024, that's still only $15 billion worth of revenue per year. For perspective, Walt Disney did nearly $70 billion worth of business in fiscal 2019.

And of course, even if its growth rate is slowing down, Disney+ is still growing.

The point is, don't let one person's personal red flag obscure the bigger picture. Barclays still likes Walt Disney well enough to call it a hold, and still sports a price target of $175 per share. That's above the stock's present price near $171, which is 23% less than the analyst community's consensus price target of just over $210 per share.

Why not the Dow?

Meanwhile, the broad market remains ripe for a wave of profit-taking.

Don't misread the message. Timing the market is, in general, a sucker's game. That's largely because too many investors hold out for making an exit at what feels like the exact top, or hold off on an entry until we're at what appears to be the precise bottom. The quest for perfection is the tripwire. If you're willing to scale out of positions when the market is elevated and trickle into new positions when stocks as a whole are suppressed, the timing strategy can have its benefits.

To this end, despite the rebound effort seen over the course of the past few days, stocks as a whole are still overbought, and there's not quite enough upside potential on the table to justify the degree of downside risk we're also currently facing. The Dow Jones Industrial Average is now back up to 90% above its March 2020 low, and back within sight of August's all-time high of 35,631.

That's fine, but at nearly 24 times its constituents' collective trailing-12-month earnings and more than 19 times next year's projected profits, the blue chip index is richly valued compared to its historical norm near the mid-teens.

Person sitting at a desk, reviewing financial charts.

Image source: Getty Images.

It's hardly a guarantee that the Dow will soon be cratering. It might, or it might just meander for a few days... or weeks. It could conceivably defy the odds and continue rallying in a big way.

From an odds-making perspective, though, the odds of a bet on the Dow here aren't as good as a bet on Walt Disney.

Think bigger picture

This isn't always the case, mind you. In March of this year Disney was a name to avoid after an overheated run-up, while buying a Dow-based index fund like the SPDR Dow Jones Industrial Average ETF (DIA -0.09%) was a smart move. Ditto for early 2016, before Disney+ was even on the radar. Both stocks were great buys in March of last year, when the pandemic's arrival in the United States pummeled everything.

And that's the thing to appreciate, as well as remember -- nothing is ever permanent, including uptrends and downtrends. While you shouldn't be on the hunt for precise highs and lows, it's not a mistake to use the market's natural price ebbs and flows to your advantage, including avoiding marketwide gains that are going to be tough to hold onto.