Maximum Profit isn't the "holy grail" of investing (no system is), and it's not for everyone. But for those investors who are okay booking losses on occasion to win the bigger picture (grow your account value) and are interested in shorter-term trading (our average holding period is six months) then I would encourage them to give Maximum Profit a try. The worst thing that will happen is you will learn a lot about investing, trading, stocks, and behavioral economics. Regarding the "hack," it goes back to your first question about Wall Street rigging the market. One of the beauties of being "overlooked" by the big guys on Wall Street is that you can get away with more without raising suspicion. Now I know that sounds fishy, and maybe even illegal, but it isn't. Nothing we do is illegal. We are simply buying and selling equities. We are just leveraging a market anomaly that is momentum. Because no one truly understands the mechanics of why or how momentum works, other than it just does, we are able to snag solid gains in a short amount of time. Like the 70% return we are sitting on from a small renewable energy company we bought just two months ago. Or the two stocks that are up 65% each in less than six months. But that doesn't sound legal. Is your system legit? The short answer is yes, the system is legal and legit. We aren't doing anything fancy. There's no options or derivatives involved. Just buying regular old stocks that have been flagged for having a potential growth catalyst that should push shares higher. A great example is chocolate-maker Hershey (NYSE: HSY). Shares of this company hadn't gone anywhere for years. Yet my system flashed a "Buy" on the stock in November (in the midst of the near 20% market pullback). As you can see from the following chart, shortly after my system told us to buy, shares took off. To put that into perspective, an investment in the S&P 500 over the same time period would have only provided you with a 5% return. There's nothing illegal about buying shares of Hershey at an opportune time. To be sure, my portfolio has stocks for just about everybody. My system doesn't judge. It flags small caps, international stocks, undervalued stocks and what I've dubbed "World's Greatest Businesses," which is where you'll find stocks like Hershey. What are some other tactics that individual investors can deploy to safely make money in the markets? From my perspective, it starts with three steps: performing due diligence, sticking to the fundamentals, and remaining wary of the herd mentality. I agree with those three principles. Everyone should do their own due diligence. There's no one-size-fits-all investment. You have to find what works for you. I see Maximum Profit as a tool to help investors wade through all the ticker symbols out there. I do provide analysis on each of the stocks that are recommended, but it's always wise to do your own research so you're comfortable with the investment and understand all the risks. If you can work your way through a company's fundamentals, you're already ahead of most investors. I came from the traditional side of investing that is value investing. And Maximum Profit has a fundamental component to its algorithm. We call it Cash Flow Relative Strength, or CFRS for short. We want to make sure the system isn't flagging fly-be-night companies, and one of the best line items to help determine that in my opinion is cash flow. Cash flow is the life blood of any business. Unlike sales and earnings, it's much tougher to "massage" or fake. Other tools that I believe make you a better investor is understanding and managing risk. Whether that's through position sizing or stop losses, you have to know what your risk is before you get into a trade. Buying a stock is the easy part. Knowing when to sell, whether it's to book a profit or cut a loss, is what separates a successful investor from one that simply treads water. The emotional side of investing is where a lot of money is made or lost. But it's also the least talked about part of investing. Investing isn't easy. It can be one of the most difficult ways to make easy money. But that's why we developed Maximum Profit, to help investors become more successful. We wanted a system that didn't just tell you what stocks to buy, but more importantly when to sell. And we've had great success doing just that. Editor's Note: I've just discussed with Jimmy Butts his clever (but easy to use) method for legally "hacking" the market. Want more details? We've put together a presentation that allows you to get started with Jimmy's system, right away. Click here for details. |
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