Know Exactly What to Buy, What to Sell, and How to Protect Your Money in 2017
Welcome to 2017!
I am absolutely thrilled you’re on board for two reasons: a) because this year is going to be even better than last year, and b) because we’re in this together, which means you’ve got a huge advantage over millions of other investors who are trying to “go it alone.”
Speaking of which, I want to jump right in today with three simple things that will help you know exactly what to buy, what to sell, and how to protect your money this year.
And, of course, beyond…
Three Maxims for 2017
Millions of investors are worried about market conditions right now and that’s totally understandable given the rocket ride we’ve enjoyed since November 8 when Donald Trump won the most contentious and acerbic presidential election in history.
The “experts,” including Nobel Prize-winning New York Times columnist Dr. Paul Krugman, MIT economist Simon Johnson, and entrepreneur Mark Cuban, among others, almost gleefully called for a massive decline. But I told you that conditions were ripe for a “rip your face off rally” should “The Donald” win. And, more importantly, that you had to be “in” to win.
You know how that story ended given that all the major averages ripped higher in a post-election melt-up that continued right out of the gate Monday in early trading before some of the froth came off.
More importantly, though, so does your bank account if you’ve been following along with dozens of Total Wealth recommendations that powered up, including Raytheon Co. (NYSE:RTN), Lockheed Martin Corp. (NYSE:LMT) and Altria Group Inc. (NYSE:MO), just to name a few.
The list of things that could derail markets this year is long and hardly distinguished. There’s Russian strongman Vladimir Putin’s aspirations to contend with. China’s moves in the Far East. Another E.U. crisis brewing… the Fed and its rate hikes… ISIS. None of these things is going away any time soon.
That means the key to profits is in flipping that equation around.
You can’t let doom, gloom, and indecision trip you up.
Instead what you want to do is focus on opportunities worth hundreds of millions of dollars that will be created when other investors who are not part of the Total Wealth Family get tripped up.
The way I see it, 2017 will be a great year to focus on basics and on three themes that we’ll come back to repeatedly because they’re so important given current market conditions.
First, buy cheap.
Most investors chase performance, which is why this time of year you can open up just about any mainstream investment rag, magazine, or Internet site and see countless stories about “top performers,” the “best-ranked ETFs and mutual funds,” or even the “best-performing asset classes.”
It’s a cycle we’ve talked about many times. Just last year, for example, there was oil, then tech, then social media, then IPOs, then top stocks for a Hillary presidency, and then, of course, stocks to buy under President Trump.
No doubt you get my point.
What most investors fail to realize is that chasing performance is a lot like trying to drive a car by looking in the rearview mirror, and about as effective. Eventually you’ll drive into a proverbial ditch… or worse.
The latest Dalbar data shows this kind of thinking cost investors a staggering 233% in lost performance over the last 20 years. That’s like throwing away $23,300 for every $10,000 you invest.
What you want to do instead is identify stocks that have yet to catch the public’s attention using objective criteria like we do here at Total Wealth based on Unstoppable Trends, “must-have” products and services, and careful risk management.
Second, buy smart.
We know that the markets are not going to sail along smoothly given everything going on in the world today. There are simply too many emotional inputs. To think otherwise is naïve.
For most people this is scary as hell because they don’t understand that chaos creates opportunity.
Put another way, it’s the mechanism by which you get to buy low and sell high.
What’s more, the best stocks tend to get beaten up the worst when emotions run high, which is why everybody is so scared in the first place. Not coincidentally, though, they’re also the stocks that come roaring back first and most powerfully.
The key is a business model backed by an Unstoppable Trend that’s entirely independent of whatever caused the markets to freak out in the first place. Becton, Dickinson and Co. (NYSE:BDX) got pounded from December 2015 to last February, losing more than 13% in the market’s volatility, but came roaring back to a 23% gain on strong earnings that were completely unrelated to market skittishness.
Alphabet Inc. (NasdaqGS:GOOG) is another one that got trashed last summer, ultimately losing 11% in only 11 weeks. Then it, too, reversed hard when people recognized that they’d overreacted and quickly closed 15% higher.
Not to beat a dead horse here, but this is why the Unstoppable Trends we follow are “unstoppable” in the first place – because they’re backed by trillions of dollars Washington can’t derail, the Fed can’t muss-up, and Wall Street can’t hijack.
Third, buy “fast.”
I’ve coined a new term – “global challenger.”
People ask me all the time if this is the same thing as a disruptor and the answer is, “no… not quite.” There are plenty of companies that have done things differently… then failed. Polaroid, Eastern Airlines, GoPro Inc. (NasdaqGS:GPRO) and Twitter Inc. (NYSE:TWTR) come to mind, for example.
What I am talking about here are companies moving so quickly in sectors of the economy where their clients cannot afford to not invest in what they offer. For lack of a better term, they’re “must-haves” on steroids.
To paraphrase Dr. Albert Szent-Gyorgyi, who won the Nobel Prize in 1937, they’re companies “seeing what everybody else has seen yet thinking what nobody else has thought.”
Take Raytheon Co. (NYSE:RTN), for example. The defense contractor booked $1 billion in contracts in the week after Christmas, including $534.1 million in missile contracts from the Pentagon alone. No nation can afford not to spend on national security at the moment.
Or how about HEICO Corp. (NYSE:HEI). The electronics defense contractor just reported record-breaking net sales, operating income, and net income for the full year 2016 and Q4 fiscal 2016.
All three metrics were up 16% year-over-year, and the company projects even more growth in 2017.
Income-starved investors will appreciate the fact that HEICO also just increased its semi-annual cash dividend by 13% – the 77th consecutive time it has done so.
In closing, I’ll be back Friday with more of my thinking about what this year has in store for us as well as one company that’s especially well-positioned for a turnaround that nobody sees coming.
Insiders, by the way, love it.