This may be your most important investment decision

Vaseline4 weeks ago

0 4 minutes read

This may be your most important investment decision

Editor’s note: On Tuesday, September 24, 8:00 PM ETmy fellow InvestorPlace Eric Fry and a special guest of his will sit down to talk about the market chaos we’re seeing in 2020… and how to prepare for even more chaos to come.

Despite last week’s rate cut, several headwinds — the wars in the Middle East and Ukraine, the election and more — are still swirling in the markets and could have a drastic impact on the share price of nearly every stock going forward. Monday. Eric’s special guest is convinced this could happen due to a set of alerts he’s been receiving. At the event, he’ll share further how he gets these alerts…and how you can too.

You can click here now to reserve your spot immediately.

To prepare for this event, Eric joins us today to share a story from his special guest. Take it away…

Hello, reader.

On Wednesday, the Federal Reserve cut key interest rates by 0.5% on the final day of the Federal Open Market Committee meeting.

Treasury yields fell on the news and the stock market continued to hit new record highs on Thursday.

In addition, Fed Chairman Jerome Powell has hinted at another 0.5% of cuts this year… and even more rate cuts in 2025.

This is very optimistic news for all kinds of investments.

But…maybe you don’t trust the Fed to cut another 0.25% at the November meeting…and another 0.25% at the December meeting. Maybe you’re still smelling dissent… or you’ve got a bad feeling that the November election is reigniting inflation.

If this is the case, you may want to reduce your exposure to those market “events” and make some sales before those meetings. In this case, you need one exit strategy.

Recently, the guest joining me for a special video event next Tuesday (you can register here), told me a story about why he believes exit strategies are the single most important decision for every investment, no matter what market-moving events might occur…

Not long ago, this fintech CEO was watching a video that caught his eye. It featured one of the world’s most famous traders starting a training course for two novice investors.

He told me…

The students of this trader barely understood the stock market. But given the trader’s expertise, I expected him to have them ready for trading greatness. After all, every budding investor wants to learn from people who have been trading professionally and successfully for decades.

However, when the three gathered for their first lesson, my guest couldn’t believe his ears. As he told me, the merchant’s first question to his two students was simple…

“What companies are on your list to buy or trade?“

Students excitedly whipped up some “meme” stocks, Apple Inc. (AAPL) and several well-known retailers (not all of which were actually still in business).

The merchant then asked the following question…

“How do you want to get into your position?“

Despite all his experience, my guest continued to tell me that the trader “broke a cardinal rule of investing” by asking this question. The most important question, says this fintech CEO, is never how or where you want to buy a stock.

“This is because the most important part of a transaction is not entrance,” he says. “It’s the way out.”

Learn how and when to exit a position

Regardless of how much time you have invested, risk management is the most critical component of what we do.

To continue from my guest…

We want to make as much money as possible. But we also want to protect our principal and earnings in case our position goes sideways.

And – no matter how good you are – a position can always go sideways.

If someone says they have a perfect trading record, you should ask for proof. If someone says this is the easiest thing in the world, then you should go.

Trading is very hard. Investing is just as difficult. That is why there is a perception that you need a professional to help you. But you don’t need them. It’s a myth that you need someone to help you manage your portfolio or assess your risk.

One of the first things you need to learn when doing both is knowing how and when to exit a position.

The markets are full of stories of people who didn’t take profits off the table and became psychologically too invested in their losses from all-time highs. Instead of taking gains, they found themselves stuck in a situation where a 100% gain retreated to 0% or even went into negative territory.

Remember that in the stock market, no company stays at the top forever. The entire economy is marked by cyclical phases, changes in competition and innovation.

At this point in the story, my special guest for Tuesday’s event brought up a specific example…

Take a stock like Nokia.

There was a time when this company was trading at just $60. It collapsed after the dot-com bubble burst. But it gave investors a nice pop in 2007 and pushed to $40 from the $20 range the year before.

Guess what happened next? Despite being one of the most important mobile phone companies globally, it suddenly found itself facing new competition from a company called Apple.

Nokia cracked. It hasn’t traded above $10 in a decade.

I could tell story after story after story like this.

Don’t let your profits evaporate

Instead of holding on to our “darlings,” my guest suggests that there are several ways to exit a trade or position to avoid the fate of holding on so long that you see your profits evaporate.

Knowing when to pick up your winners—and when to take profit to avoid losses—is far more important, says my guest, than what stocks you buy…or even when you buy them.

That’s why on Tuesday, September 24, 8:00 PM ETI’ll be going live with my guest – one of the best fintech minds in the business. During this special event, he will reveal innovative technology that can help you get the maximum profit potential from both your current and future trades…

It also alerts you to the next big sale… before is produced.

The story we shared with you today gives just a hint of the full powers of this technology.

You can click here to automatically reserve your seat for that event now.

Sincerely,

Eric Fry

senior investment analyst, InvestorPlace

Vaseline4 weeks ago
0 4 minutes read

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