As always, be sure to read my disclosures / disclaimers below. Most notably, I do not encourage or recommend for anyone to follow my lead on any stocks listed here or otherwise, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article. Cheers.
Following My Work & Tracking Sheet
1. For those of you who are just starting to follow my work, PLEASE focus on the educational pieces. They will enable you to make a LOT MORE MONEY (!!!) on my picks. For that, I would start by checking out my YouTube Channel. Specifically, watch my 2021 videos, starting with the oldest ones first.
2. Then, you’ll be better equipped to follow and take advantage of my personal tracking sheet (to see the stocks I’m most interested in).
3. When I add or remove a stock, I immediately post the move in my StockTwits Feed.
4. Anyone who wants those alerts can click the StockTwits link, follow me (@MasterCap), and make sure the notifications settings (in the app and on your phone) are set properly to receive my posts in real time.
5. I’ve also created a quick presentation HERE to help you get started.
Managing Market Risk / Reward
FYI, my personal tracking sheet also shows what mode I’m in: Green Light, Yellow Alert, Orange Alert, or Red Alert.
I use LONG-TERM charts (like the 40 year S&P 500 chart below) to gauge the overall risk / reward of the stock market (I also use them for my individual stock investments).
Anything near the top of the chart has proven to be a great time to take profits out of stocks and seek to make money elsewhere (long-term government bonds usually work great from those points).
Anything below the gray line has been a safe buying zone, with the exception of Red Alerts…
…and I’ve only been in Red Alert mode twice EVER (in late-1999 5-months before the Internet crash and in mid-2007, 5-months before the financial crisis).
Anything near the bottom white line represents a generational (near once in a lifetime) long-term opportunity.
I’ve saved (and made) a LOT of extra money over the past 25 years using this as a guide:
During a Green Alert – Unless otherwise noted, I’m in Green Light mode (owning stocks without fear).
During a Yellow Alert – Conceptually, I want to keep most of my favorite stocks, but get rid of the third I like the least. With that money, I want to buy something like RWM, which goes up when the market goes down (and vice versa). By doing this, I’ll be 50% “hedged” (hedged = protecting the stocks you like/own against a stock market drop).
Explained: if you have $3 of stock and sell a third, you now have $2 in stocks… and if you put that other $1 in RWM, you have protected/hedged half of the $2 you still have invested in stocks).
During an Orange Alert – Just before the COVID crisis, I issued my first-ever Orange Alert. I saw the crisis coming, but didn’t see it impacting the market quite as badly as the crashes of 2000 or 2008 (which proved correct).
Conceptually, for an Orange Alert, I want to sell 50% of my positions (the ones I like the least… keeping pretty much everything I “LOVE LOVE”). With that money, I want to buy something like RWM to protect those positions. In doing so, I’m FULLY hedged.
Explained: (if you have $3 of stock and sell half, you now have $1.50 in stocks… and if you put that other $1.50 in RWM, you have protected/hedged 100% of the $1.50 you still have invested in stocks).
During a Red Alert – I sell almost everything and bet AGAINST the market by being heavily invested in things like RWM (which, again, goes UP when the market goes DOWN)… but again, these instances are extremely rare. I’ve only been in Red Alert twice in my life (luckily, those two times were 2000-2002 and 2007-2009, which resulted in big profits).
How / When To Get Back In – When the market is dropping, I don’t want to try to call the bottom. Only God can do that. Instead, I make my best guess and START buying EARLY. The reason is simple — my guess has a 50/50 chance of being too optimistic or pessimistic. So, if I wait for the market to drop as much as I expect, I have a 50% chance of missing the bottom (and with it, the great opportunity to buy low).
So, I try to think of it as 5 stages: very early, early, on time, later, and much later. I want to buy a LITTLE “very early”. I want to buy a decent chunk “early”. I want to buy a LOT near the levels where I think the market will bottom, but I also want to keep a little in cash in case we go even lower, so I can buy later or much later.
Good Luck !
- My StockTwits Feed
- WhatsApp Chat Boards
- My YouTube Channel
- The Quick Investor’s Guide To SMSI
- MoviePass Projected To Burn $600M In 2018
- Lose 33% In 9 Months To Make 1,000% In 15?
- Buying SMSI — Today Is The Day I’ve Been Waiting For!
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Disclosures / Disclaimers: This is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.
I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.
I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter. Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.
I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article. The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.