The Top Investing Strategy for 2009
Today's Financial News - Posted September 23, 2009
What is the best strategy to make profits in the stock market this year. Turns out, the answer is downright “ridiculous”!
by J. Christoph Amberger
Baltimore, MD — TFN: When Agora Inc. founder and president Bill Bonner stopped by in Baltimore the other day, he asked me what I thought about stocks. Especially American stocks.
Now, I know. As an immigrant, I tend to be more gung-ho pro-American than the natives. And since I started to work for Bill back in 1988, you’ve known me as a stalwart bull and unwavering partisan when it comes to stocks.
(Up until last year, I think I was mostly right on both sentiments.)
Bill seemed surprised that I agreed with your bearish views this time around: I have indeed turned bearish on America and on U.S. equities — at least in the long term.
But let me qualify this.
True, last November — a day after the election — I sat down with my TodaysFinancialNews.com team of analysts and editors to have a heart-to-heart.
Frankly, I was ready to close down shop.
The economy had begun their cataclysmic decline. The government was about to be replaced with a gaggle of ideologues and academics whose main qualification seemed to be an overbearing hostility to business and a lack of understanding how the global economy works.
And the gobal stock, currency, debt, and commodities markets were collapsing around our ears.
Luckily, my team talked me out of my funk.
Don’t get me wrong, I still believe that American business is going to be decimated — mainly by the cost and disadvantages it’ll be burdened with courtesy its own government.
But over the past 10 months, my colleagues did me one better. They showed me — with hands-on, incontrovertible proof — how to generate rock-steady, double-digit returns in the stock market. Even in this extremely volatile market!
(Maybe I should say “because of this extremely volatile market.”)
The term I came up with for our strategy at Hot Stock Confidential is ridiculous. I ran it past a few of Agora’s top-level copywriters and they all turned up their noses.
You may laugh. But there’s really no better way to describe it.
You start with the “Moles” — good stocks. In fact, you need what we can “Damn Good Stocks” to make it work. That takes some digging! But there’s till plenty of those around. Companies with good, understandable products… good management… and, even more importantly, a powerful catalyst in the wings.
Not surprisingly, there’s a lot of those in the bio-tech sector. Firms feverishly awaiting FDA approval for new drugs or medical devices. Or eager investors twitching to act on whatever news the company can generate.
Then there are retailers… mining and commodity stocks… military contractors… alternative energy companies.
The good thing about this market is that most stocks are still incredibly cheap — at least compared to last year’s price levels. And there’s considerable capital on the sidelines. Jittery as Nancy Pelosi on Red Bull. But ready to pour in and out on short notice whenever something positive happens.
This being a volatile market, we’ve pretty much eliminated our downside risk control mechanisms: Given the nature of the market right now, we even expect that any given stock pick of ours spends some time in the red. It’s not that we like this. But we like it even less when we have to close out a damn good stock position due to a nervous-nelly trailing stop!
Now that we have the “mole” in position, it’s up to us to wait. The mole remains underground. But we expect it to pop its head up into positive territory at the drop of a dime.
But you’ve got to be ready to strike!
Now, I wouldn’t bore you with all this if we had garnered 5 gainers for our Hot Stock Confidential subscribers this way. Or 10. Or 15. Or even 35. Or 40 even.
But just yesterday, we brought our padded mallet down on the 63rd unsuspecting “mole” so far this year.
That’s right: Our “damn good stock” selection process has generated 63 double-digit gainers so far this year. Not just 63 gains… but gains taken.
(We have a good dozen open positions in single- and double-digit territory that we may take gains on any minute now.)
Our subscribers LOVE it!
Sure, we’ve struck out, too. 13 times so far this year. Which has reduced our average gain on our 76 closed positions to “only” 22.4%. (Our colleagues in other divisions would point out that this is a “compound gain” of 1,706%… but I don’t think I’ll dwell on that.)
To be quite honest, I’m stunned myself. In the 21 years I’ve worked for you, I don’t think I’ve ever encountered a publication that generated 63 winners in 9 months — not during the Internet boom, not during the Bush boom, and certainly not in a crisis year like 2009.
Sure glad it’s our publication!
So if I may qualify my position on stocks: I remain a long-term bear, thanks mainly to Washington’s agenda. But in the short- and medium-term, I certainly see no lack of opportunity to make gains on U.S. equities.
But you need to adjust your expectation level and mode of operation to the markets: Tellingly, our average holding period has been just 53 days.
And you have to be ready and disciplined to take your profits and run!
Next Article: IPO Strategy: Perfect timing for A123
Be the first to leave a reply.
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down