Breaking Wall Street’s Rules for Fun and Profit
- How clickbait business headlines can bankrupt you
- Revealed: The Wall Street “rule” you must break if you hope to make money
- Indicators: Sand in the U.S. factory gears… Grinch-y U.S. consumers
- On the hunt for “Zika stocks” as a new pandemic threatens
- More reader tales from the front lines of the war on cash
Here’s a great example of why tuning out the media noise is essential to your investing success.
“Tesla is about to enter the most critical period in the company’s history,” says a breathless article at Business Insider.
Really? The electric-car pioneer is set to introduce is “mass market” Model 3 in March — $35,000, thank you very much.
Who knows, maybe it really is the most critical period in the company’s history.
But the man we introduced last week as Trading Guru X couldn’t care less.
Today we rip off the mask… we reveal the identity of the man who was told by CNBC to go jump in the lake… and we show you how breaking one of Wall Street’s most cherished “rules” could be the smartest thing you’ve ever done.
In 2012, Michael Covel couldn’t have cared less that Tesla recorded a loss of $396 million.
The mainstream was very down on Tesla at the time. MarketWatch was direct: “Why You Shouldn’t Invest in Tesla.” Forbes said shares were “heading into the Valley of Death.” Jim Cramer was dissing it on CNBC: “The stock is very expensive.”
“My system ignored all that ‘noise’ and triggered a buy signal on Dec. 10, 2012,” Michael tells us, “when the stock was trading at $33.81.”
Worked out well, huh? “The system triggered a sell signal about two years later, when the trend started to lose momentum,” Michael explains. Result — a 471% gain.
Cramer’s line about Tesla being expensive reinforces a point we made here last week — a stock that’s expensive can become even more expensive.
And as we cited with the case of gold stocks in 2014, something can look dirt-cheap… and become cheaper still.
“Even if you’re 100% right about your analysis,” says Michael, “there’s no guarantee the market will move in your direction.”
Back to that Tesla headline with which we began today’s episode: “That analysis never ends. There is so much of it online you could lose your mind trying to keep track of it all.
“Even if you were smart and studious enough, would having all of the expertise to understand the fundamentals allow you to know the right time to buy or sell in the markets to make money in the long run?”
Which brings us to the cherished Wall Street rule you must break if you hope to make money in the long run.
“Millions of investors,” says Michael, “have been brainwashed to believe that the secret to making a fortune is to ‘Buy low, sell high.’”
As we saw in our gold stock example last week, there’s a high chance it won’t work out. “Buying low generally means you’re buying on bad news or when something is out of favor.
“Sure, you might get lucky and see a quick recovery every now and then. But more often than not, the stock will either keep moving lower because there’s something wrong with the company or you’ll have to wait for a very, very long time for things to turn around.”
What should you do instead? “Buy high, sell higher.”
That’s the principle behind Michael’s proprietary system. This system said Apple was a buy in 2005 — even though it had leapt 446% in the previous two years.
As we said last week, it was right on the money — AAPL jumped 2,010% over the following 10 years.
“It does not matter whether you’re trading stocks or soybeans,” says Michael. “Trading is trading, and the name of the game is to make money, not to get an A in ‘How to Read a Balance Sheet.’”
Michael is joining the Agora Financial team at a crucial time in market history.
“With the boom-and-bust environment created by the Fed, it seems the next market collapse is just around the corner,” says our executive publisher Addison Wiggin.
“More important, making money in the markets has become extremely difficult. You can’t simply follow the traditional ‘buy and hold’ strategy. If you park your cash in ‘safe’ government bonds, or CDs and other money market accounts, you’ll collect almost nothing. On the other hand, if you ‘buy and hold’ stocks, you risk losing half of your portfolio or more during the next market crash.”
And so Addison has been on the hunt for a super trader to guide you and your fellow readers through these times. “This was no easy task. After all, the best traders in the world are extremely secretive. They hate sharing their moneymaking secrets with everyday investors like you and me.”
Michael Covel, on the other hand, has been spreading the gospel of “trend following” ever since he discovered it 20 years ago — and used the technique to develop his proprietary strategy and become a multimillionaire.
He’s written four books. He’s made a documentary. He’s created a popular podcast. He’s helped others become multimillionaires. And now we’re giving him a platform to spread the word as far and wide as possible.
Today we’re launching a brand new entry-level newsletter with Michael’s name on it. Charter subscribers will get access to a new fifth book by Michael — one that won’t be available on Amazon or anywhere else.
But enough of us going on about Michael. Let him tell his story in his own words… and show you the way to retire rich… when you follow this link.
To the markets… where the major U.S. stock indexes are giving back a bit of Friday’s monster gains.
At last check, the S&P 500 had shed nine points, resting at 1,931. Crude, meanwhile, is sliding hard — down nearly 5% and clinging to the $32 level. The Wall Street Journal tells us stocks and crude have traded in closer correlation during 2016 than at any other time since 1990 — a financial media factoid that falls into the “interesting but useless” category.
Gold is picking up strength, the bid now $1,125 — another high last seen in October. Treasury yields are climbing today, but the 10-year yield remains comfortably under 2%.
U.S. manufacturing has been shrinking four straight months now — as we learn this morning from the ISM manufacturing index.
The January number clocks in at 48.2, a touch higher than December’s 48.0. (Numbers below 50 indicate a contracting factory sector.) However, there’s good news in that the new orders component of the survey is back above 50.
Elsewhere in the world, the Chinese manufacturing number is 49.4. That’s six straight months below 50. In the eurozone, the figure is 52.3, but that’s down from the month before.
Whatever Americans spent on the holidays, they didn’t spend it in December. The Commerce Department’s “income and spend” report shows consumer spending ruler-flat in December — despite personal incomes growing 0.3%.
This report also includes “core PCE” — the Federal Reserve’s preferred measure of inflation. It clocks in at a year-over-year increase of 1.4%.
On the one hand, that’s nowhere near the Fed’s 2% target. But on the other hand, the number hasn’t been this high in a year. If the Fed wants to cite growing “inflation expectations” to justify another rate increase in March, they can point to this number.
The winter of 2016 might be to “Zika stocks” what the fall of 2014 was for “Ebola stocks.”
As we write this morning, the World Health Organization is meeting in Geneva deciding whether to declare a global emergency.
Zika, unlike Ebola, is not usually fatal. Many patients recover in a few days.
“However,” says Ray Blanco of our science-and-wealth team, “infection from this virus has been associated with damage to the nervous system from an autoimmune condition called Guillain-Barré syndrome. And even worse, if a pregnant woman is infected, there is a possibility her child could be born with a condition called microcephaly — a small head and an underdeveloped brain.”
The virus has been spreading fastest in tropical climates because it’s transmitted by mosquitos.
“In 2014,” says Ray, “the Ebola panic did drive up the valuation of a select group of biotechnology stocks.” One of them is in Ray’s Technology Profits Confidential portfolio… and he says it might see a bump again thanks to Zika.
“The company has a rapid system for designing a DNA vaccine and bringing it into production,” he tells us. “This makes it more responsive to emerging threats than vaccine developers using older technology.”
“This problem is real,” says the first of many emails responding to Friday’s episode, in which we related a reader’s frontline story from the war on cash.
“I came back from a coin show with some cash. When I went to deposit the $1,200 into my OWN account, the teller said I needed to show ID.
“It’s not the banks. This is coming from up high — the government. They claim it’s all about money laundering, but it’s really about control and pushing us into a cashless society, wherein hiding income and money is far more difficult.”
“I’m a longtime customer of my bank,” says a second, “and I transact business in person multiple times a month.
“Last week, I stopped by to pick up a box of pennies. I put the $25 in currency on the counter, the teller brought out the pennies and as she was doing her required paperwork, she directed me to provide my ID.
“When I asked what type of ID was needed since it was a cash-for-cash transaction, she explained (without any sense of humor at all) that ‘…it was required.’ Not only did she demand my ID, but I was required to provide my account number so the transaction could be ‘tied’ to my account.
“Remember, this was simply trading $25 currency for $25 in pennies by a 20-plus-year customer who frequents the bank in person roughly every 14 days. I’m glad you’re keeping people aware of this developing issue.”
“Chase is the only bank I know of that is requiring ID when making cash deposits, for probably the past year and a half,” writes a third. “I asked if this was a new government requirement, and they said it wasn’t… yet!”
“On a recent trip to JP Morgan Chase,” writes a fourth, “I was told that as of March 1, 2016, I can no longer do cash deposits into the business account of my significant other… I’ve been doing this for over 10 years and am known to tellers and managers of the branch.
“I was advised that I could deposit the funds (the cash and the checks he receives from his customers) into MY account and then write a check into his business account. When I asked if this wouldn’t trigger some sort of an alert as to where this money came from, I was told, ‘Oh, no — that trigger is only set when the amount is $10,000, and that it was not the figure over months of deposits.’ I’m not too sure about that.
“The other option was for both of us to go into the bank and fill out the paperwork so that I would have signature authority for this account. I’ve not investigated this option as yet, but I fear it’s just another way for the ‘eyes’ to gather more information about individuals.
“Thanks for your good works.”
The 5: Chase seems to be in the forefront of this stuff. It was Chase that in the autumn of 2013 barred personal and small-business customers from international wire transfers.
Our contacts within the banking industry told us at the time Chase was going out of its way to look “more” compliant with the Patriot Act and IRS requirements to flag cash transactions — the better to avoid billions in fines for various misdeeds both real and imagined.
“I recently went into a Chase bank in Colorado to deposit $300 cash into the U.S. account of a friend who lives in Ecuador,” a fifth tells us.
“I offered my identification, but they told me they would only accept a check or money order. I promptly went to the grocery store and got a money order. I asked at the grocery store if they wanted my ID, and they said it was not necessary. I then returned to the bank, and they did not then require my ID. So as it ended up, there was no paper trail except a worthless money order number.”
“Not sure why you need to deposit cash in a bank,” says an alternate opinion, “when there are so many businesses, such as Costco or Best Buy or restaurants or gas stations or mechanics, etc. — the list is almost endless — where you can spend it rather than use your credit card or write a check (do people still do that?).
“I have never had a problem spending cash. When that happens, then there is a problem. Until then, I don’t see a problem.”
The 5: Except there’s nothing a cop loves more than to pull over a car and it turns out to have large amounts of cash. Beware.
The 5 Min. Forecast
P.S. Here’s another instance of media noise that could mislead you and bleed you dry: “Big U.S. banks are in better shape than they have been in years, and yet they trade at levels last seen in 2011,” says Barron’s — which sees the Big Four jumping 20%.
Maybe, maybe not. But if they do rise from here, it’s not necessarily because they’re cheap. “Buy low, sell high” can bankrupt you if you’re not careful.
For a safer and saner strategy, we urge you to consider best-selling author Michael Covel’s proprietary system — proven to deliver gains including 346% on LendingTree… 615% on Cambrex… and 1,441% on Jazz Pharmaceuticals. Michael shows you how it works right here.