TFN’s Guide to Profitable Investing 2009
Today's Financial News - Posted July 31, 2009
“To make money in the markets, you need to pick not just good companies… by Damn Good Companies.”
by J. Christoph Amberger
Baltimore, MD — TFN: No matter how you look at it, the year 2009 has been a stressful one for investors.
Starting with the ominous dips last fall, through the Inauguration Crash in January, and on along the summer rally, I can’t remember a year that has taxed my nerves as hard as 2009: Bluechips turned into pennystocks, “tiger” economies morphed into mangy alley cats, Capitalists became socialists, and Communists became Capitalists.
 J. Christoph Amberger |
Sure, at 9,200 the Dow Jones Industrial Average now’s up over 40% from its February lows.
But that’s till just a 2% gain over where we started the year… -23% below where we were a year ago… and a whopping 34% below the 2007 high. Tens of trillions of dollars in shareholder valuations have disappeared. Investors have thrown in the towel by the millions… taking their losses and turning their backs on the market for good.
Because it’s hard to see how you can possibly make up your losses without risking what little is left!
My business is providing good, profitable information to subscribers looking to my team and I to provide them with solid investment recommendations.
At the end of last year, I found myself with a choice to make. I could either close down shop. Or find a way to make this market work for our subscribers.
Which was quite a challenge.
You see, the market crashes and crashettes of the past year pretty much knocked the pegs from under technical analysis. The drastic reversal of fortune left analysts without the floor of history to build their formulas on.
I knew we’d have to completely re-engineer or approach.
It was back to basics!
What we noticed early on is that the broad declines in the markets punished saints and sinners alike. It didn’t matter if a company ran a tight ship or a party boat, their share prices all plunged.
But while the party boats continue to flounder, the workhorses are putting meat on the table and money into our pockets.
It’s what we knew all along. To make money in the markets, you need to pick not just good companies… by Damn Good Companies.
But you’d also have to kiss your technical, long-term horizons goodbye. Because market volatility has swamped even the most solid price chart!
Instead of picking a company and letting it ride for months, maybe years… extreme market volatility forces you to be watchful… and ready to react to the slightest change.
Jokingly, we’re referring to this approach as “Whack-a-Mole” Investing:
You know the bases are loaded. You know the mole’s going to pop its head up some time. You just don’t quite know when and where.
Accordingly, you keep your eyes peeled and your reflexes sharp… ready to pounce and secure profits at the drop of a hat.
It’s not a novel approach, I know. Trading services have advertised they’d do just that for years.
(Although I could tell you “lazy editor” stories that would make your hair stand on edge…)
But this market has forced even stock pickers to adopt this strategies.
And — without bragging — I daresay you’d be hard-pressed to fine any team of stock pickers more watchful, nimble, and successful than the crew at Hot Stock Confidential.
41 double-digit winners in 7 months
Having worked in the financial newsletter industry for 20-plus years, I freely admit that this is the best and most committed group I’ve ever had the pleasure to work with.
And it’s paid off handsomely for Hot Stock Confidential subscribers
The HSC team closed the month of July by scoring its 41st double-digit gainers since January. Winning picks outnumber losers by 41:10.
In July alone, we took seven profitable recommendations off the table.
So much for “summer doldrums”:
20% on Geron (GERN) on 07/31/2009
30% on Trico Marine Services Inc. (TRMA) on 07/30/2009
51% on Vical Inc. (VICL) on 07/27/2009
21% on Vimpel Communications (VIP) on 07/27/2009
21% on Sonic Automotive Inc. (SAH) on 07/20/2009
19% on Dyax Corp. (DYAX) on 07/13/2009
27% on Sangamo Biosciences Inc. (SGMO) on 07/01/2009
Nice and steady, wouldn’t you agree, building wealth gain by gain.
We were able to lock in many of these gainers by applying what we call “wealth-protection stop losses”: When a stock rises pat 25%, the team comes together to determine just how strong the price surge really is.
We’ve watched enough stocks gain 20, 30, even 40%… and then suddenly fall back into negative territory — losing all gains in a few hours.
We hate that.
Hence, we try to lock in reasonable gains above 20% whenever we can. We frequently end up adjusting our stop loss upward… say, from 20% to 30%… or higher.
Of course, the drawback to stop losses is that a volatile spike downward can stop you out of considerable upside. We’ve seen this with Vical just this past month.
But in a volatile market like this, chances are that you’ll get another chance at profits in a Damn Good Stocks.
We consider ourselves bound by our own version of the Hippocratic Oath: “First, do no harm.”
Nobody has ever gone broke taking a profit. Especially double-digit profits. Especially 41 times in seven months.
We’re going into the next 5 months of the year with our bases loaded: A good half dozen of our open positions already has double-digit gains. More are in the single-digits. And some a screaming buys at current prices.
I’d like to extend my personal invitation to you to join us in our endeavor to turn 2009 from the most stressful to one of the most profitable years in your life as an investor.
Next Article: AngloGold Ashanti: Getting paid for risk
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