|HSL / Newsletter / Track Record / Tutorials|
What's the best strategy for
maximizing stock gains? The old maxim, "Cut your losses & let your profits
run" is the answer. But you won't achieve that goal by buying Uncle
Freddie's hot tip of the week and then holding on, hoping for the
best. As you've probably noticed by now, even on days when the S&P 500
is up big, there's still plenty of stocks that go down, some even
hitting new yearly lows. It's a sad and unnecessary experience
to see your stocks heading south while the market heads north. That doesn't
mean you won't have losing investments, but via charts, you'll get rid
of the non-performers quickly before they do any serious damage
to your portfolio.
So how do you actually maximize your gains? Select chart-strong stocks and funds and use a protective stop-loss to limit the amount of original capital at risk. Move the protective stop-loss up to breakeven as soon as possible. Again, this is where charts help out. Chart study will tell you where to place your stop. Move it up too soon & normal market volatility will knock you out of your position too soon. After the breakeven stop comes the profit-protecting stop so that you don't give back all your gains. Keep your stop too far away & during a market correction or bear market, you'll lose most or all of your hard-earned profits. The lack of a properly placed profit-protecting stop is what will cost many investors the most during the next serious market downturn—don't YOU be among them!
You've probably heard a lot about "secrets of the professionals." Well, they exist. But they're not some complicated formula that requires a Ph.D to decipher. They're simple, common sense truths. Do professionals spend hours trying to find the next "hot" stock? No. True professionals understand that preserving original capital & not taking big losses is the secret. Don't worry about small losses. Worry about the "Mother of All Losses," because that's the one that will stop you from reaching your financial goals.
Optimists think a bull market will last forever. Pessimists are always reminding the optimists that ever since Adam and Eve got their eviction notice, a bear market has followed every bull market. Realists (and successful investors) ask, "What should I do now to maximize profits?" Rather than getting the glue from the labels "bear market" and "bull market" all over your fingers and creating a mess, just go with the charts. Properly analyzed (big if--and the reason some don't think charts are worth the paper they're printed on), they'll safely guide you through both bull markets and bear markets—keeping both your profits and sanity intact.
How expensive is an ego? Answer: As expensive as you let it be! The longest bull market in history has made "buy & hold" investors complacent. They figure that if an investment moves against them, eventually it will recover and they'll at least recoup their losses. Aside from the fact that this isn't a "given," what they aren't taking into consideration is opportunity loss. Let's say you buy XYZ, it declines 15% to a point below which the chart says, "Sell." Many will hold on & hope that someday XYZ will rally enough to at least get out at the original purchase price. In that way, they won't have to take a loss (monetary and ego). But what about all the investments in which you could have used that tied-up capital?! That's opportunity loss and it's rarely considered by the average or beginning investor. Isn't it better to take a 15% loss now and move onto a few big double or even triple-digit winners rather than hoping to merely recoup your losses some months or years (usually) later? If not, how expensive is your ego and can you really afford it?
While looking at the included chart examples, think about what you've just read and see if you don't come to the same conclusions. The above profit-solid principles are incorporated into every HSL recommendation. We wouldn't have it any other way for our subscribers!
Back to Tutorial Page To Subscribe