Investor Spotlight

Formula to Out Perform the Market

In my post last week, I shared the highlights of an article from the Barrons magazine. They showed that the top 100 hedge funds on an average, underperformed the market (using the performance of $SPY as the barometer of the market performance) by -4.04%. Adding insults to the injury, they had the nerve to charge you a fee for allowing them to manage your portfolio. I learnt my lessons during 1987 October market crash. My account was down by -22% on that black Monday and by the time the week was over, it was down a whopping -40%. We had 11 "distribution" days and the market pulse according to IBD (Investors Business Daily) had changed to "Market in Correction" by the beginning of October. That was a sign to be in CASH. Had I been managing my portfolio, I could have mitigated the -40% loss by simply being in CASH.

Here are some simple rules to follow to mitigate the risk in the market. Following these rules will enable you to Out Perform the Market.

Rules:

Fire your hedge fund managers and take control of your portfolio. Identify a mentor to help you in your investment journey.
Trade and invest in Growth Stocks. They tend to perform twice as better than the general market during an uptrend.
Change your mind set and "Buy High and Sell Higher".
Do not buy cheap stocks. They are cheap for a reason.
Buy only very liquid stocks (trading 500,000 shares or more daily) or options on those stocks.
Have a Trade Plan in place and discipline yourself to cut your losses identified in your trade plan immediately. That could happen on the very same day that you purchased the stock.
Buy only the leading stocks in the leading sector.
Stay in tune with the market. Do defensive selling when the "Market is Under pressure" or we have "Market in Correction".
Learn to scale into a stock gradually when we have a "Confirmed Uptrend".

Results of My 10 Stocks compared to the Indexes

Here are the results of the stocks that were initiated during the last "Follow Thru" day we had on Wednesday April 11th. 5 of those 10 stocks (50% win ratio) were closed out for a loss of -4% each. I have highlighted the performance of the 3 indexes for the same period.

Indexes:

$DJI ... - 0.60%
$SPY ... + 0.33%
$QQQ ... + 2.27% (Leading Index)

10 Stocks:

$ADBE ... - 4% (10 days in trade)
$BZUN ... - 4% (2 days in trade)
$CASA ... - 4% (9 days in trade)
$SEDG ... - 4% (8 days in trade)
$SGH ... - 4% (4 days in trade)
$ABMD ... + 16.27% (23 days in trade)
$BR ... + 1.00% (23 days in trade)
$CLR ... + 5.57% (23 days in trade)
$CPRT ... + 4.76% (23 days in trade)
$RHT ... + 6.74% (23 days in trade)

Conclusion:

Overall performance of all the 10 stocks (50% losing stocks n 50% winning stocks) was a whopping +14.34%. They did over 6 times better than the leading index $QQQ. This was possible because I followed the simple rules I highlighted in this post and was disciplined enough to cut my losses immediately.

Mentoring Program

Would you like to learn:

How I Out Perform the Market?
What stocks to buy and when?
How to Time the market?

Make a commitment to take control of your portfolio and learn from me. Listening to the professional money managers and financial advisors is the very wrong thing to do. You have the unbiased data from the Barrons magazine of the lack of performance of the professional hedge funds.

Schedule a FREE 30 minutes of "Discovery Call" with us and start your investment journey with me as your mentor and a coach. Don't procrastinate and pass up the opportunity of making a difference in your portfolio. Start out with a resolution to invest in your education.

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