Rachel’s note: On Monday, industry veteran Kris Sayce introduced us to the “10 x 10” Approach to investing. It is a simple, three-step process that ensures your portfolio will thrive during any market conditions.
Today, Kris showcases one of Strategic Trader editor Dave Forest’s best investment ideas… one that’s made his subscribers incredible gains, but that most people have never heard of…
We think it’s the perfect category for one of your 10 columns in the “10 x 10” Approach. It’s got the potential for 1,000% gains… while putting a fraction of your money at risk.
Check out how a tiny, $5,000 investment in these “built-in leverage” plays can make you as much as a $50,000 investment in regular stocks…
By Kris Sayce, editor, Casey Daily Dispatch
If you’ve read the Dispatch this week, you’ve learned how you should draw your investment “columns” on paper.
You’ve written your current investments into those columns.
And you’ve worked out whether you’re a “Have Enough” investor or a “Not Enough” investor.
So what now?
In today’s Dispatch, we’ll turn to one of our Casey Research experts to show you what to do next…
If you’re new to the Dispatch, welcome. If you’re a long-time reader, welcome back. Either way, thank you for reading today’s edition.
Our goal is two-fold:
To introduce you to the most important investing themes of the day, and
To show you how to profit from them.
We do this by drawing on the ideas of our in-house investing experts: Dave Forest, Nick Giambruno, and the founder of our business, Doug Casey.
Today, we’ll put into practice what we’ve learned so far. And show you real-life examples of using the “10 x 10” Approach.
Let’s Recap the “10 x 10” Approach
As a refresher, the “10 x 10” Approach is a simple but effective way of creating a portfolio of diverse, high-reward investments.
It involves dividing your capital into 10 investment ideas or themes. Each theme should give you the chance to make 10 times your money.
For instance, one of your themes could be big speculations. It could contain stocks where you expect to make 10 times your money in 12–18 months.
Another theme could be a group of longer-term plays. Perhaps you’re investing at the beginning of a long-term trend… where it may take 5–7 years to make 10 times your money.
Of course, because we won’t get everything right, we also assume one or two of the ideas will fail. Instead of making 10 times your money, you might lose 30%, 50%, or perhaps your entire investment.
But because you’ve diversified, what you make on the winners will more than make up for those that fail.
Let’s give you an example using an idea from one of our Casey Research experts, Dave Forest.
The Safer Way to Use Leverage
Now, we can’t give you the exact names of the investments involved. These are still open positions in the Strategic Trader premium service.
One of the big themes in Strategic Trader is a specific type of stock play that has built-in leverage. You may have seen us refer to this idea before in the Dispatch.
The beauty of it is that instead of investing, say, $5,000 into a stock, you could invest just $500 in another related security that gives you the benefit of a rising stock price.
That means you could allocate one of your “10 x 10” columns to a diverse portfolio of these investments for a relatively small amount of money.
For instance, let’s say you invested just $500 into each of Dave’s last 10 built-in leverage plays. Here’s how it would have played out…
$500 in Dave’s Last 10 Built-In Leverage Plays
Just $500 invested in each (total of $5,000 invested), would have resulted in a total profit of $12,458.64, or 249%.
That’s a fantastic return… especially with so little money at risk.
Now compare that to investing in the stocks associated with this security that didn’t have the built-in leverage.
To get a similar profit, you would need to invest 10 times more – around $5,000 – in each.
$5,000 in the Companies’ Regular Stocks (No Built-In Leverage)
In percentage terms, it’s still a good return.
But instead of investing a total of $5,000, you’d need to invest around 10 times as much – $50,000 – to get the same return.
Small Stakes, Big Returns
You see how this works?
You only need to invest small stakes to make big returns. That allows you to diversify across a number of these built-in leverage plays with just a small amount of capital.
To us, this is a perfect way to play one of your columns in the “10 x 10” Approach.
Another column could be your “growth” investments, like cannabis companies… another column could be devoted to metals… another could be dividend-yielding companies… and so on, until you’ve got 10 columns.
To sum up, each column should have the capacity to make 10 times your money (albeit, perhaps over different time frames).
Each column should have an equal amount of capital devoted to it… and each should be a different investing idea or sector.
And you should build it based on your risk tolerance: whether you’re a “Have Enough” or a “Not Enough” investor.
It couldn’t be easier.
Tomorrow, we’ll show you another trend – this time from Crisis Investing chief analyst Nick Giambruno – that deserves a column in our “10 x 10” Approach.
It has produced similar outstanding results. Details tomorrow.
Editor, Casey Daily Dispatch
P.S. If you’re interested in how Dave made that 249% return for his readers… you can check out his briefing right here.