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Friday, April 12, 2024

Philstockworld Merry May Trade Review – Part 3

What a month May was!  

So far, in the first two weeks (through the 9th), we had 94 Trade Ideas for our Members and all but 11 (88%) were winners (see Part 1 and Part 2).  Of course we use hedges, where we purposely bet the opposite direction in order to protect ourselves so it's not possible to be 100% and even 88% is strange - usually we're aiming for around 66%.  

The trick isn't to be right ALL the time, but to control your losses so they don't counteract the gains.  Usually, we go for trades that have a good chance of paying 200% or more within 18 months so we EXPECT to make 10% a month or more.  When those work, we get huge wins - if we then keep our losses to 20% (of our allocation) or less - the statistics take care of themselves as +20%, -20%, +60%, -20%, 0% on 5 trades (for example) gives you 5 allocations that made an average of 8%.

When one of those allocations goes up 100%, you don't even need to get half of them right to have a winner - but ONLY if you control your losses AND maintain consistent allocations.  That's what we practice in our Long-Term Potfolios - PORTION CONTROL!  

By scaling into positions (something else we practice with our Members in our Long-Term Portfolios), even if we lose 100% of our initial position - it's generally only about 20% of an allocation.  Since we can't lose more than 20% of an allocation and we usually try to make 200% or more on the cash we lay out for our long-term trades (which nets 40% or more for a winning allocation) - again, math does its work over time.

That being said, let's have a look at how week 3 went in May:

May 12: Just Another Manic Monday

While investors may not have learned anything from the last crash, the Banksters have learned that you can manipulate just a few key, heavily-weighted stocks in order to make an entire index seem to be performing better than the sum of its parts.

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