In a few days, I’ll be hosting an exclusive briefing with my friend Dr. Richard Smith. We’ll be talking about an innovation that Richard has developed that will fundamentally alter the way you trade crypto assets.
In a nutshell… Richard, who is a Ph.D. in math, has developed a systematic methodology for maximising your upside whilst reducing downside and overall volatility. I’ve tested Richard’s system for myself. And it works.
You can sign up for the live briefing here, which will take place at 8 PM EST on March 6 (or 9 AM on March 7 if you’re in Hong Kong/Singapore).
To explain a bit more about the technology he’s spent over a decade building, Richard shares how he overlaid his strategy onto billionaires’ portfolios and saw some pretty incredible results. See for yourself…
Billionaire investors like Warren Buffett and John Paulson are leaving money on the table.
Today, we’re going to show you exactly how they are leaving money on the table and how you can pocket some of that money for your own portfolio.
We love digging into the quarterly SEC filings that big investors need to file for their publicly-traded investments in the U.S. Recently, for example, we looked at how billionaires changed their asset allocations from one quarter to the next.
Today, we’ve honed in a new question to ask of the billionaires…
The question we asked is, “What color was the TradeStops Stock State Indicator (SSI) for all of the stocks that the billionaires sold in 3Q 2017?”
The TradeStops Stock State Indicators
The SSIs act as a full life cycle indicating the health of your stock. They are designed to tell you at a glance exactly where any stock stands relative to my algorithms.
We were quite surprised to see that fully 60 percent of the stocks that the billionaires sold were stocks that were in the SSI Green Zone when the billionaires sold. Take a look.
The SSI Green Zone is an indication that a stock is performing well. It has already risen substantially, and a solid uptrend is in place. (The Yellow Zone is for stocks in a period of correction, the Red Zone is for stocks that are stopped out, and gray is for stocks where the SSI is not available).
Why then would some of the world’s greatest investors sell stocks that were technically strong and moving higher? Great question… and it’s a question that we’ll return to shortly after we look at a couple of examples…
One billionaire in particular made two big sells in the SSI Green Zone in the third quarter of 2017 – John Paulson.
For example, Paulson bought FedEx (NYSE; ticker: FDX) in the middle of 2016 and rode it higher before selling it.
It looks like Paulson made more than 33 percent on his money in a little more than a year. But the stock is still moving higher and is up around 20 since he sold it. That’s a lot of money he left on the table.
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Intuitive Surgical (Nasdaq; ticker: ISRG) is another stock that Paulson sold while it was still in the SSI Green Zone. He bought it in the fourth quarter of 2016 and sold it with a nice gain of more than 50 percent in 3Q 2017.
But the stock has continued moving higher and is up around 30 percent since he sold it. That’s even more money that Paulson has left on the table.
So, why are these super-smart investors getting out early and leaving money on the table?
Of course, we don’t have the luxury of picking up the phone and asking Paulson why he sold FDX and ISRG, but there’s one big reason why a billionaire investor may have to sell early… and why you can pocket the profits that they’re leaving on the table.
Small investors have advantages over big investors
As small and agile investors, we enjoy some serious advantages over the world’s better-known investors. One of those advantages is that we don’t have to figure out how to buy and sell billions of dollars of stock!
Think about it. It takes large investors a long time to sell out of a stock. We can do it in one trade without upsetting the market. The billionaires can’t do that.
It takes them time to work their way out of a stock. It’s easier for them to sell if their stocks are moving higher and there are many buyers for the stock.
As individual investors, we don’t have to sell when the billionaires sell. If a stock is in the SSI Green Zone, there’s no reason to exit the position. We can hold the position for as long as it will continue to move higher. That’s what we call un-limiting our gains.
In our Beat the Billionaires portfolio, one of the rules is that we stay in a stock if it’s not in the SSI Red Zone even if the billionaires have sold it. This rule is responsible for a large part of the huge outperformance TradeStops has had over the billionaires themselves.
To recap, billionaires often make moves we don’t immediately understand. In the examples I shared above, they tend to get out before their winners have completed their run.
Also, the billionaires face challenges we don’t, which could account for some of their market behavior. But the biggest take-away for us is that once we’ve identified a winner in their portfolio – we don’t have to get out, just because they do.
As long as we let our winners run – and stay in the stock as long as it’s not in the Red Zone… we can still profit massively from their ideas.