Justin’s note: Today’s essay will help you make superior gains in a shorter time period. And you don’t need to spend countless hours tracking the market’s every move to do it…
As Palm Beach Daily analyst Nick Rokke shows, you can start investing like the “Big Boys” by simply following his two strategies below…
By Nick Rokke, analyst, The Palm Beach Daily
Peter Lynch is famous for coining the term “10-bagger.”
A 10-bagger is a stock that rises 10 times in value after you buy it.
Lynch even wrote a book about finding these elusive types of stocks called One Up on Wall Street.
It’s one of my favorite books on investing… If you’re a serious investor and haven’t read it, go online and buy it right now.
Peter Lynch should be near the top of anyone’s list of greatest investors ever.
He ran the Fidelity Magellan Fund for 13 years. From 1977 to 1990, his average annual return was 29%. He crushed the S&P 500, which averaged 16% annual returns over the same span.
But here’s the thing…
Lynch rarely snagged any 10-baggers.
In fact, Lynch held on to the average stock for only four months. That’s usually not long enough to collect 10 times your money on a single position.
The truth is, if you want to generate higher returns in a shorter amount of time—like the pros—you’ll need to be a much more active trader.
These are guys who make multiple trades daily, weekly, or monthly.
Most people think that you need lots of patience to achieve 100%-plus gains. And usually, you do.
There’s no problem with a buy-and-hold strategy. After all, investing in quality, safe, and income-generating stocks for the long haul is one of our bedrock principles.
But we also like to play the market… and try to make gains in a few weeks or months that takes passive investors a whole year to achieve.
To actively generate profits trading like Lynch did requires a major commitment of time and effort, though.
Today, we’ll show you two ways to trade like the Big Boys with a few mouse clicks.
Two Means… Same End
Both active and passive traders try to make big returns. They’re basically different means to the same end.
However, active traders can accumulate gains much quicker than passive investors.
Some active traders trade in and out of positions every day. We can’t follow their strategies. But other active traders hold their positions for weeks or months.
Those are the traders we want to follow.
On the other hand, passive investors generally buy stocks (either individually or through index funds) and hold them for years.
Instead of catching a quick rally, passive traders buy and hold. They believe the market will rise over time and lift their investments. They don’t worry about whether the market is going up or down in the short term.
Look, you can make a lot of money either way… (We use both strategies at Palm Beach Research Group.)
A buy-and-hold approach could earn you 10% per year… We’ll take that any day. But if you want to make superior gains like Lynch, the active route is the way to go.
For example, if you put $100,000 into Lynch’s portfolio, you’d have made $3.4 million over the 13 years that he ran the fund.
If you put that same amount into an index fund that tracked the S&P 500, you’d have only made $700,000 over the same span.
Lynch’s strategy would have made you almost five times your money. And it’s not that hard to adopt it…
Two Simple Ways to Trade Like a Pro
To make huge returns like Lynch did from active trading doesn’t mean you need to sit in front of a computer screen all day watching stock prices.
One simple way to follow the Big Boys is to read their 13F filings.
All funds that have more than $100 million under management need to file a quarterly report with the U.S. Securities and Exchange Commission (SEC).
These reports are public record. So you can look at them yourself and see what funds are buying and selling, and follow suit.
That way, you can follow the trades made by some of the world’s best investors, like Peter Lynch, Warren Buffett, and David Tepper. They do all the research for you.
If you don’t want to track 13F filings, another simple strategy is to follow our Elite 25 portfolio.
Each month, we update this portfolio. And all it takes is about 30 minutes per month to make the trades.
Over the past 20 years, the Elite 25 has returned 21% per year. That’s compared to just 7% per year for the S&P 500.
You can check out the Elite 25 portfolio right here.
These two strategies will help you become a more active investor… and make you more money in the markets.
Nick Rokke, CFA
Analyst, The Palm Beach Daily
P.S. There’s also a third way to actively trade the stock market without all the time and effort involved—finding an expert to do it for you.
That’s what PBRG guru Teeka Tiwari has done… He’s uncovered a Wall Street insider we call the “Billionaire Broker.” This master trader worked for one of the world’s top investment banks, where he discovered a secret about the billionaire “whale” traders.
In his historical trial—that was independently verified by a $1.1 billion third-party financial services company—his top 150 trades averaged an astonishing 2,418%.
We will reveal his identity during our special Confessions of a “Billionaire Broker” presentation at 8 p.m. ET on Thursday. You can register for your free seat right here…
Today, readers respond to Strategic Investor editor E.B. Tucker’s recent essay, “Visit This Place While You Still Can”…
E.B. Tucker, congratulations! The tale of your frozen assets, your trip to Cuba, the everyday details of your stay, what to do, what NOT to do in Havana, made me laugh so much! You got into the spirit of South America (I am Argentine) and the Caribbean way of life! That is a great asset! In a similar way, but in the reverse, I love going to the States: everything is so orderly and neat and predictable and opulent. It’s a wonderful contrast to our daily chaos.
I am one of your subscribers who will seem perhaps a little off-the-wall for what I am about to say. Mr. Tucker reports that he was able to “stop for a cigar”—an event that he relates with what seems to be a declaration of his being macho—or perhaps it was to express his relief? Whatever, Mr. Tucker, know that there are still some among us who see cigars for what they are: a filthy indulgence that makes everything around them smell like a stack of burning goat-sh*t, no matter that one pretends otherwise.
It is not cool to smoke cigars, Mr. Tucker, although Casey himself has often mentioned that he does so as a point of pride. People who are as intelligent as those in the Casey gang seem to be should rid themselves of their proclivity for cigars—or at least sneak around the corner when they need to suck on one and afterwards don’t tell anyone about it.
As always, let us know your thoughts, including any suggestions you may have for the Dispatch, right here.
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