The Overlooked Rules That Led Me To Triple-Digit Gains In 2014
It was an interesting year in the financial world in 2014, and nothing short of a spectacular year for readers of my premium newsletter, Game-Changing Stocks.
#-ad_banner-#Between the Fed ending its quantitative easing program, continued troubles in Europe, and a collapse in commodities, there was plenty of risk in the markets. Many of the brightest minds in finance were wondering if 2014 was the year that this epic run in the markets would come to an end.
But amidst all this turmoil, my readers and I were still able to find plenty of triple-digit winners.
It’s easy to get sucked into the worry and excitement of the markets, but those factors are all out of your control. What is in your control is how you invest.
As I preach to my Game-Changing Stocks subscribers, investing is a mental game, and state of mind is everything.
So with that in mind I’m going to share with you some of the rules I follow when looking for winning investment picks, and how they led me to some of my best performing picks last year.
First of all I’m not looking to invest in companies that are usually talked about in the mainstream media. At that point you may as well just invest in a broad market ETF, because if they’re talking about it on CNBC, you’ve already missed the larger opportunity.
I’m looking for Game-Changing Stocks. These are companies that have the technology, products or services that can materially disrupt the baseline assumptions for doing business in a given industry. These securities have the potential, in my view, to deliver returns far in excess of the market and in some cases are capable of capturing triple-digit gains.
But in order to reap the benefits of a great investment, here are some rules you should follow.
1. Always have an exit price. You need to set a target you want to hit to capture the gain you want, and you need to pick an exit point where you cut your losses. As a rule, I tend to use a 50% gain or loss as a benchmark. It’s great to capture a 360% gain, but that’s going to be the exception instead of the rule. Solid 50% gains are not even remotely uncommon among my picks. All you need is one of these in your aggressive growth portfolio to move the needle on your overall portfolio and beat the market.
2. Give your picks time. No one gets rich quick. My readers and I are making contrarian plays, and it often takes time for Wall Street to admit its mistakes. A two-year holding period isn’t unreasonable, especially for the larger gains.
3. Be realistic. No one gets rich overnight. No one buys every bottom and sells every top. Work the system, play for the long game. Just remember that some losses are to be expected.
4. Don’t panic. Keep the faith, and don’t over-focus on the fundamentals. Make conviction buys based on the company’s narrative. Most indicators are about the past. The stocks I recommend are all about the future.
Just to show you that I practice what I preach, let me tell you about some of my best performers of 2014, and one that I’m still recommending for 2015.
I first told Game-Changing Stocks readers about Chimerix, a maker of vaccines that soared on news of the Ebola outbreak. It was one of my highest-conviction plays back in March. I wrote about the possibility of a global pandemic after discussing it with Dr. Anna Mummert, a leading expert on epidemiological mathematics. At the request of doctors, the FDA gave the nod for Chimerix’s experimental drug Brincidofovir as a treatment for Ebola in the United States. With all of this positive news, the stock took off. Those who followed my advice were able to pocket a 116% gain in less than a year.
But looking at the chart, if I didn’t follow my rules I could’ve been impatient and sold after its initial 37% pop. I gave my pick time, I was realistic by knowing that this was a longer-term play, and I didn’t panic when the stock initially whipsawed with the Ebola news. Most importantly I had an exit price and recommended that readers sell the stock on January 5th for a 116% gain.
I originally recommended Esperion back in August of 2013. Esperion is a drug company led by the scientist who discovered Lipitor, the bestselling drug of all time.
Here was my advice in the original write-up, which turned out to be spot on.
|In my view, Esperion is a good bet for an aggressive growth investor who is willing to hold the shares for a minimum of five years AND who would be able to see their value drop in half without flinching. As for risk analysis, the bottom line here is you’re betting on a coin flip. The odds are 50-50, but the payoff likely will be a little better than 2 to 1.|
Again by following my rules I gave this trade time, understanding that this stock could take a while to develop. I was realistic, and didn’t panic when shares were trading down 25%. This led my readers and I to a 155.6% gain, but I’m still staying true to my original time horizon. In a recent issue I recommended that readers who followed my advice sell half their position and hang on to the other half as there could still be significant upside ahead.
I originally recommended this stock back in August of 2012. This company is the workhorse computer chip that enables Apple Pay. It’s an “NFC” chip, for “near-field communications,” capable of beaming an encoded signal within a few inches, enough to reach a POS terminal at Starbucks or any other retailer that accepts the nifty new electronic payment protocol that comes standard on the iPhone 6.
Since originally calling this stock as a “buy,” I’ve kept a close eye on this company. In January, I told readers that the 195% return we’ve seen so far could be just the beginning. This is a growth story that’s far from over — mainly thanks to Apple Pay.
If you stick to the rules I’ve outlined above, there’s no reason why you shouldn’t be able to enjoy similar success in 2015. Investing in the kinds of picks I recommend in Game-Changing Stocks can take time, patience and fortitude. But the payoff can be tremendous. The good news is that there’s still monumental potential ahead for the NFC chip maker I mentioned above, as well as four other key Apple suppliers.
Because of this enormous profit opportunity I’ve prepared a brand-new research video that contains urgent information about the companies behind Apple Pay. Please take a second to check it out by clicking this link.