When we spoke last Tuesday, I gave you what I consider to be a never-sell tech investment.
Indeed, Fidelity Nasdaq Composite Index Tracking Stock (ONEQ) is a vehicle you can reliably count on to build wealth over the long haul.
After all, this exchange-traded fund (ETF) gives you access to what I conservatively forecast is $39 trillion in wealth, covering everything from artificial intelligence to the Internet of Things.
That’s the power of owning nearly 1,900 stocks all in one well-managed basket.
But I know from several recent talks with investors that you are looking for solid tactical tools for managing your way through the choppy markets.
I can see why. In just the last four months, the S&P 500 has had two big rallies and two sharp declines.
Now, then, if ever there was a time to take solace from macro factors, this is it.
The Federal Reserve remains committed to keeping the economy moving forward with interest rate cuts if that’s what it takes.
At the same time, consumers remain upbeat. They’re looking at the best jobs market we’ve seen since back in 1969. Led by a 1.8% rise in vehicle sales, consumer spending rose .4% in August, beating forecasts.
What we’re facing is a choppy, news-driven market. And the reason is simple: if there’s one thing Wall Street hates, it’s uncertainty.
That’s why you see the markets move on headlines related to two primary things:
- Signs of progress or setbacks in the U.S.-China trade spat.
- Signs that economic growth is either healthy or slowing.
This explains why the S&P sold off by 7% between April 30 and June 30 and then by 6% from July 26 to August 22.
Both were followed by strong rallies but with a whole lot of chop in between.
So, if you’re feeling a bit confused right now, you’re in good company. The pros who should know better find themselves constantly reacting to the headlines.
What we need in a case like this a set of tried-and-true tools that can turn choppy markets to our advantage.
I use these all the time for members of my monthly newsletter, the Nova-X Report. It’s a key reason why we can rack up triple-digit profits when other investors are busy spinning their wheels.
Take a look:
Choppy Market Tool No. 1: The Cowboy Split
I’m shocked more professional investors don’t know about this powerful moneymaking tool. But it’s one we use here all the time.
Simply stated, the Cowboy Split is a staggered-entry system. You take a position in a stock at market – and then enter a “lowball limit” order to buy more if a discount comes your way.
In general, I recommend employing a 15% to 20% discount from your entry price as a second buy point. Here’s how it works…
You acquire 50% of your intended stake of XYZ Tech Corp. at a price of $50. In this case, should the market trigger your “lowball limit” order, you would automatically buy a second 50% stake at $40 a share, for an average price of $45.
Now assume XYZ rallies all the way to $60. You would then have 16.6% appreciation on your original shares. But it’s that second stake that really juices your profits.
See, that second half’s gains are double those of your first buy. This way, you end up with overall gains of 25%, or roughly 50% more than had you just bought your full stake at $50.
Choppy Market Tool No. 2: The Free Trade
Whenever a stock doubles in value, take a free trade and lock in gains. That’s a sell order for half of your stake. Doing so means you have all your original capital back and are then playing on the “house’s money.”
It’s a powerful way to protect profits against a choppy market with two side benefits. First, you can end up owning a suite of stocks for free. And, second, you stay in the position to reap any new upside.
Let me give you two classic cases of just what I’m talking about. At my monthly newsletter, the Nova-X Report, we took a free trade earlier this month.
So, while many investors were struggling, any members following along were making big money by employing this and the other tools we’re talking about here.
And that free trade was not an isolated case. In all, Nova-X members took six free trades so far this year.
Choppy Market Tool No. 3: “The Autopilot Profit System”
Whenever possible, set yourself up so that you exit a position with specific gains no matter what happens.
That’s where “The Autopilot Profit System” comes in handy. It’s a unique way of protecting profits with a combination of taking gains and using trailing stops.
It’s a great way to take some money off the table if you want to protect gains before a free trade would kick in. The tool works like this…
Let’s say you sold a portion of XYZ Tech when it was up 30%. Now, you can afford to see if the stock still has more upside while at the same time protecting your profits against any reversal.
In this case, you could set your stop at your original entry point and walk away with combined gains of 15%. Or, you can set the trailing stop above your entry price to lock in more money.
The beauty of the system is that you set up your minimum profit figure in advance. After that, there’s no need to worry about what happens, because “The Autopilot Profit System” is protecting your hard-won gains.
I use this all the time when my members have the opportunity at a free trade. We often set a 50% trailing stop on the second half so we walk away with combined gains of 75% no matter what happens.
You can see that, by using our Three Choppy Market Tools, you can keep on investing in winning tech stocks – even in this rocky market – and know that we’re prepared for anything the world throws at us.
And you won’t drive yourself nuts on this Road to Wealth… Paved with Tech.
Cheers and good investing,
Michael A. Robinson