I’ve noticed that many individual investors follow the Will Rogers school of investing.
Will Rogers was a vaudeville performer and later a movie star. In the 1920s, he became a syndicated columnist and shared folksy wisdom during the Great Depression.
Among his pithy insights was some important investment advice that caught my eye.
Rogers said: “The way to make money in the stock market is to buy a stock. Then, when it goes up, sell it. If it’s not going to go up, don’t buy it!”
Rogers meant it as a joke, of course. But I’ve seen many individuals rigorously follow this approach.
Now, they don’t explain their philosophy like Rogers did. They say things like: “I’m in it for the long run,” or “It’s a good company, and it’ll come back.”
In other words, they are hoping they can make the stock price go up just by holding it. For many traders, this is playing with fire. Holding many stocks in the long term and waiting too long to sell can destroy wealth.
Successful institutional investors follow the market action.
They don’t simply hope their stocks will go up. They sell positions that are underperforming.
That’s because institutional investors are paid based on their relative performance.
Their bonuses depend on beating the market. Holding onto underperforming stocks reduces the chances of beating the market, which lowers their bonuses (a big deal on Wall Street).
Individuals tend to think in terms of being right or wrong … rather than how to increase their “bonus.” So, they believe they can hold positions for the long run.
Of course, they can — but that doesn’t mean they should ignore the short run.
This is where we have many opportunities to make quick returns.
And if you’re only holding stocks for the long term, chances are you’re leaving a surprising amount of money on the table…
Start Stacking Profits Now With a Box Trade Strategy
I discovered some low-risk, short-term strategies that long-term investors would likely find attractive. One is the “Box” Trade strategy.
I shared this with subscribers last year to generate returns with a 95%-win rate. Since the start of this year, we haven’t had a single losing trade so far.
When it comes to many of my strategies, I like to follow this part of Will Rogers’ advice — “if the trade isn’t going to go up, we don’t buy it.”
However, my Box Trade strategy is adaptable and takes this to the next level. Stocks don’t always have to go up for us to make money.
In fact, one of my recent Box Trades allowed us to benefit from the 19% decline in Meta Platforms Inc. (Nasdaq: META) last week. The stock sold off after announcing earnings.
Mark Zuckerberg’s plans to spend $40 billion on AI and other new technology had spooked traders.
In the long run, that spending might create hundreds of billions in value for META, and eventually reward long-term holders.
But in the short run, my subscribers collected a 15.5% gain in just two days following the Box Trade signal.
Of course, when stocks go up, we also have the chance to profit. Within just two days, we collected gains of about 5% in Microsoft Corp. (Nasdaq: MSFT), after the stock rallied on earnings.
We captured another 5% profit with a Box Trade in Costco Wholesale Corp. (Nasdaq: COST), which actually moved sideways.
I explain exactly how these Box Trades work to generate income (no matter if the price action is moving up, down or sideways) — and how you can begin trading these signals right here.
Michael Carr
Editor, Precision Profits