DOMINOS Fall Into PLACE: Big PAYDAY!
This is my last day in Manhattan. In a few hours, I’m catching a flight to Atlanta, Georgia, where I’ll be scuba diving with whale sharks, accompanied by my mermaid, in the world’s largest aquarium.
Though their name sounds scary, they are not dangerous at all.
As with many things, investing included, the terminology can complicate what is truly simple, or frighten new people from making the most financially rewarding decision of their lives – owning productive businesses over the course of their lifetime.
That’s the best way to look at it – when you buy shares of a company, a portion of that business is yours, so you want to own the best, buy it when it’s cheap, and hold it over the long-term. Some people invest in private companies, which amounts to the same thing, but these are not as liquid and are quite different.
Doing research dispels myths and allows you to become a successful investor. You must convince yourself that investing is a profession; therefore, you must respect it.
Contrary to many other professions, though, the barrier of entry to this one is nonexistent.
Your brokerage firm is not concerned with your experience at all. In fact, no one cares about it, since the more money that is invested in the stock market by newcomers, the better the returns are for the professionals, who take full advantage of rookie mistakes.
Remember this, since the stock market isn’t full of harmless whale sharks, but of great whites.
You must become attracted, with the force of a magnet, to those areas, where your strengths can help you gain an advantage.
These wealth pockets are formed in areas where the great white sharks don’t roam. Banks, sovereign wealth funds, private equity groups, and pension funds, who manage trillions, collectively, have mandates, which require them to stay away from certain types of investments, which means that the competition there is lessened, by definition, since there are fewer bidders for those stocks.
On the flip side, though, it means that at times, when the market is slow, it can dry up quickly, and you’ll see stocks plummet more than you can imagine.
This is a risk worth taking, if you realize that, at other times, there’s a flood of buyers and shares enter a phase of parabolic rallies, like we saw last year with cryptocurrencies, in 2016 with natural resources, in 2015 with cannabis stocks, in 2012 with rare earths, and the list goes on and on.
Yesterday, I took an early flight to Buffalo, New York, for a full-guided day at the Niagara Falls.
One of the questions I asked our guide, related to the phenomenon called daredevils.
These are individuals, who attempt to go down the waterfall and survive it.
It’s illegal, and the government will slap you with a fine. Your chances of survival are slim, since the bottom is made up of giant rocks, whirlpools, and the height at which you start the free fall is approximately 188ft.
Yet, every year, people go inside of wooden, padded barrels and attempt the impossible. Some of them have succeeded.
The rush is unbelievable, I imagine, but the risk to reward ratio is not favorable, in my opinion.
If anything goes wrong, there are no second chances. That’s why, when I first launched Wealth Research Group, I created the original 5 Special Reports in our download library at the website, which are the 5 pillars of investment basics. One of them is called Proper Position Sizing.
Contrary to daredevils at the falls, we can afford to make mistakes, since we protect ourselves, by taking a number of actions, with extreme discipline:
- Invest Only With TRUE WINNERS: Though investments can go wrong and stay below the cost of entry for months and even years, a winning management team eventually take advantage of a weakness in the industry that they are a part of and prepare his company for better days.
This is, for example, happening in the natural resources sector, at the moment.
The real managerial winners see stocks that they own go down, even severely, so they take massive action to capitalize on others’ panicky decisions and become stronger.
The rarest breed also continues to accumulate shares, though there seems to be no end to the carnage, because they know that sectors go from hated to loved – the pendulum swing is the mother lode.
- Use Proper Position Sizing: The way you get to stay in the game and have a second, third, and fourth chance to position early in the next Ethereum is to limit your bets to 5%-10% of your net worth, individually.
This way, even if you are forced to sell, or if the business plan fails, you are left the 90%-95% of your net worth intact.
- Cut Losses: When you roll into the stream of the river, just meters before the actual falls, there is no way to back out. The current washes you away. But, when investing, you need to monitor price action, specifically with speculative assets, such as cryptocurrencies or early-stage medical stocks, so that you can stop the trade before it gets ugly.
I decide, before placing an order, how much money I am willing to put at terminal risk, and when things go against me, I honor my initial decision.
I use what are called dynamic stop losses, so when I am using dollar-cost averaging, my stop loss price changes as well, since my average price position is continuously lowered, as well.
These are all defensive strategies, but when you’re able to catch the uptrend, the reward can be life-changing.
When I was growing up in the 1990s, a friend of mine told me that his father, along with four others, was launching a start-up tech company. He said that his father owned 3% of the business and that they were excited about the vision of the company. Five years later, it was worth $1B, and my friend’s dad sold his position for $30M, a generous sum.
We’re getting a rare second chance, as Artificial Intelligence is about to become the world’s most talked about sector, but virtually all the businesses are either private at this point or tiny start-ups, which can barely last, month to month.
There is one company that we’ve tracked down after ten months of due diligence, which has been in business for two decades. It is one of the most successful businesses of its kind, and it is spinning out an Artificial Intelligence stand-alone business in roughly two weeks’ time.
Today, I spoke with the founder, who owns an enormous position himself. I will be putting together my full report on the company, now that the dominoes have fallen into place.
Our second chance, a rare one, will potentially become the biggest payday.