KNOW YOUR CUSTOMER RULE:
Everyone in the asset management business should know FINRA’s Know Your Customer (“KYC”) Rule – Here. The rule basically states that it is the portfolio manager’s responsibility to pick investments that are suitable for each client (that is why it is necessary to know your client). I also apply this rule when buying/sell stocks.
KNOW HOW YOUR STOCKS BEHAVE:
From where I sit, it is behooves anyone who makes their own buy/sell decisions (individual and professional) to know how the stock (or market) they are interested in behaves (before they buy/sell). This way they can familiarize themselves with normal/healthy action vs, unhealthy action. Failing to take the time to properly study how leading stocks behave could cause you to zig when the stock zags and vice versa (which might cause you to mishandle/lose money – even in a monster stock).
WHY >20% CORRECTIONS ARE HEALTHY IN LEADING STOCKS:
Over the past few weeks, leading stocks (mainly momentum, biotech, and growth stocks) have been smacked, most falling >20% from recent highs (which is not an insignificant sum). Interestingly, when you study history, there are countless examples of leading (monster) stocks that correct (>20%), within a broader multi-year advance.
THE STOCK MARKET IS STRONG:
It is very important to note that even leading stocks (mainly momentum, biotech, and growth stocks) were getting hit the benchmark S&P 500 and Dow Jones Industrial Average remain perched near all-time highs. This is very healthy relative strength and bodes well for the broader market. Last year, the S&P 500 soared an impressive 29% and it has spent the past few months digesting that gain (which is healthy). Investors now want to see the market blast higher and breakout through the psychologically important 2000 mark.
KNOW WHEN TO BUY AND WHEN TO SELL:
Remember that every leading stock in history eventually topped out and needs to be sold. In addition, to knowing exactly when to buy (favorable risk/reward ratio) it is critical for you to know when to sell. In fact, that is what we show our members in the Midas Wave Alert service. Before we buy a stock- it is imperative that we know exactly where we are going to exit if wrong, that is why every Midas Wave Alert issues an entry and exit price. WE do not throw caution at the wind. Applying this advanced strategy allows you to know exactly where you are going to exit if the stock does not move in our direction. Additionally, when the stock is profitable it is important to know when to ring the register and walk away. This is exactly what we do for our members.
RESULTS ARE RESULTS. PERIOD:
In fact, in the past year, Midas Wave Alert winners include: +45.57%, 19.17%, 19.88%, 18.71%, 17.43%, just to name a few. That is why knowing when to buy is one part of the equation but knowing when to sell and walk away is an often overlooked but critical part of winning on Wall Street.
TRENDS BEND & BREAK:
Essentially, a few steep pullbacks/corrections can be healthy in leading stocks, early in their move. Let’s take a closer look at two leading stocks that were recently featured in Midas Wave Alerts: Tesla (TSLA) & Facebook (FB). Both stocks are monsters and have experienced sharp declines of over 20% 4 times over the past year. Interestingly, each decline was followed by a massive advance. Keep in mind, trends (uptrends and downtrends) break- but the move is not over until they break.
DO YOU KNOW HOW YOUR STOCKS BEHAVE?
If not, you might want to join MidasWaveAlerts today and start winning on Wall Street. Will this time be different? As always, we’ll let the market decide. Bottom line, in both bull and bear markets, you will do much better if you study how your stock behave. The same way a portfolio manager should “know their customer,” you should know your investments.
