This Total Wealth Tactic Crushed It When the Market Tanked Monday – and You Can Use It Right Now

Keith Fitz-Gerald Aug 26, 2015
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Not all investors lose money when the markets get carried out feet-first. There are a savvy few who pocket some really terrific gains by capitalizing on chaos… and they don’t even have to time the markets to do it.

Tall order?

Not if you understand how to use one of my favorite Total Wealth Tactics – the Lowball Order. A great choice under normal market conditions, it’s ideal at the moment.

We’re going to talk about what a Lowball Order is today and how you set one up ahead of time. Then, as always, I’m going to give you a few recommendations covering several of today’s most popular stocks.

I think you’re going to be thrilled by how easy Lowball Orders are to use, especially when you realize that you don’t have to sit in front of your screen all day to bank the big bucks with the best of ’em.

For lack of a better term, Lowball Orders are like a “profit-trap” you lay in advance.

Here’s how to conquer market madness and profit at your leisure.

Do This Now to Capitalize on the Next Crash

Monday’s trading wiped an estimated $5 trillion around the world off the proverbial map. The headlines reflected panic, and investors were certainly up in arms over the prospect of a 1,000-point drop in the Dow less than 30 minutes into trading.

No doubt I felt the angst building, too. In fact, I said as much on Fox Business Network’s Varney & Co. when asked about it a few minutes before the opening bell. But I didn’t go overboard, nor did I let my emotions take over.

I knew the selling would run its course eventually and, more importantly, I had a plan.

It’s one I’ve already shared with Money Map Report readers, and hundreds of thousands of subscribers have had the opportunity to profit over the years by following along.

Now it’s your turn.

If you’ve never heard the term before, a “Lowball Order” is one of the simplest, yet most powerful orders available today, especially in volatile market conditions like we have right now.

They’re great for at least three powerful reasons:

  1. You can place them in advance
  2. You don’t have to be at your computer to actively manage your money
  3. You control your risk by waiting to make your move until the stock you want to buy meets YOUR risk reward criteria.

Here’s how a Lowball Order works.

First, you line up with one of the six Unstoppable Trends we’re following – Medicine; Technology; Demographics; War, Terrorism & Ugliness; Scarcity & Allocation; and Energy.

Second, you select a stock that’s been beaten down or is otherwise out of line with long-term expectations, fundamentals, and earnings potential. Ideally, this isn’t just any old stock. It’s one that you’d buy if it ever went “on sale.” Great examples include Netflix Inc. (NasdaqGS:NFLX) at $60, Apple Inc. (NasdaqGS:AAPL) at $75, Gilead Sciences Inc. (NasdaqGS:GILD) at $70, or even Alibaba Group Holding Ltd. (NYSE:BABA) at $45. Your list may differ, but my point is that you have a list… at all times.

Third, you pick a price – to the penny – that matches your individual risk tolerance, your investment objectives, and your belief about what the company is really worth. You can do that using fundamental measures like the “price to book” or intrinsic valuations, a la Graham and Dodd.

Or, you can also simply pick a technical point at which there is logical “support,” or even previous lows depending on your time frame. There’s no hard-and-fast rule here, but many traders find 10%-15% below recent 30 day lows to be fertile hunting in choppy markets.

Fourth, you place your order to buy “XYZ at $___ per share or less, GTC” – meaning good till cancelled.

Then, you sit back and wait for a price dip. Why and when really doesn’t matter. The markets can react to all sorts of things – bad news, headlines from China, a misguided Fed.

What you’re hoping to catch is exactly the type of move you saw Monday when the markets dropped catastrophically and traders caught up in the moment started making mistakes. Your goal is to buy at impossibly low levels. My experience is that you’re in the neighborhood when people tell you as much.

To be clear, this is NOT timing the markets.

What you’re doing here is laying a “profit-trap” in advance of conditions that you know favor your money rather than the institutional traders who would otherwise take it from you.

Take The Walt Disney Co. (NYSE:DIS), for example.

The stock had been on a tear since January, leaving most investors who want to buy in the dust. Monday, it fell to a low of $90 per share… which not coincidentally represents key support right before the run and a fabulous entry point for another leg higher. It closed the day at $95.89/share, for a quick 6.54% gain.

Or, how about Apple.

Last Monday, the Cupertino giant blew through price levels others thought impossible on its way down to a low of $92 a share before reversing and closing at $103.12 for a quick gain of 12.09%. Yesterday it opened at $111.11 a share. Even if traders got in early at $95 based on levels set last fall, chances are they did just fine, too.

Obviously these are both shorter-term entries, but the principle still works well over far longer time frames.

Consider Altria Group Inc. (NYSE:MO).

Based on the chart below, I can envision lowball orders placed in several logical areas I’ve underlined in yellow: $43, $44.50 and even $48 per share.

With a dividend yield of 4.20% on the heels of an 8.7% dividend increase, I wouldn’t be especially concerned by a few percentage points up or down in the scheme of things, especially if your anticipated holding period is a multi-year period.

You can use Lowball Orders on almost any financial instrument from stocks and bonds to ETFs.

Right now, for example, I think a Lowball on the SPDR S&P 500 ETF (NYSEArca:SPY) makes great sense if the markets take out last year’s low of 181.92, which I’ve annotated here for you using a swing trading setup oriented around a 7-21 day window.

At the end of the day, it doesn’t really matter whether you are placing lowball orders as a day trader or as an investor. The principle is the same – buy low and sell high.

That’s how the game is played and, more importantly, how you profit from quick swings in the markets that drive most investors straight to the poorhouse.

Lots of great companies got put on sale in a market move Monday that had nothing to do with the business case for owning them: Visa Inc. (NYSE:V), Google Inc. (NasdaqGS:GOOG), Netflix, Apple, Celgene Corp. (NasdaqGS:CELG), and more. So go line up your share of profits right now.

More selling only plays into your hands…

Until next time,

Keith

44 Responses to This Total Wealth Tactic Crushed It When the Market Tanked Monday – and You Can Use It Right Now

  1. Alexandra Tavlarides says:

    I have always bought my stock through a broker, but with today’s volatility I would like to apply some of your strategy. How would you recommend I start an online no load brokerage account? What would you recommend?

    • Keith says:

      Hello Alexandra.

      I am not sure what you mean by a “no-load” brokerage account. That’s usually a term reserved for mutual funds sold without a fee at the time of sale. There are several great online brokerage firms that can help you get started. Explore a few of them and see which one you like based on your objectives, risk tolerance and intended time horizon.

      Let me know how you make out.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

    • Houyhnhnm says:

      For very active trading, Interactive Brokers (interactivebrokers.com) beats everybody with trades starting at $1, but there are activity minimums.

      Depending on account size, Vanguard and Merrill Edge have the best deals I can find for self-directed stock trading.

      Good luck,

      Houyhnhnm

  2. Tim says:

    Low ball orders is a great advise. Can you give us a specific stock at a specific price? That would be very helpful for someone who is a novice at this. Thank you Keith.

    • Keith says:

      Hi Tim.

      I’d love to but that’s information my publisher reserves for our paying subscribers. That said, I will share as much as I can in upcoming articles, too.

      Best regards and thanks for being part of the Total Wealth Family (and for understanding), Keith 🙂

  3. Mark says:

    New to Market but you have given me some great advice, thanks

    • Keith says:

      Thanks for the kind words Mark!

      I’ll do my best and appreciate you being here.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  4. Ray Clauser says:

    I think your idea is great, but why didn’t you just call it a “limit order”

    • Keith says:

      Hi Ray.

      Technically a lowball order is a limit order as you have pointed out. However, I call’em Lowballs because that’s exactly what they are…limit orders hung out there at levels other traders would either deem impossible to hit or at prices so low they’re an insult to everybody paying full price.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

      • Katherine says:

        Hi Keith,

        I have been learning a lot from you since May. I will try the “the limit
        order” on DIS on Monday. I like your approach. These are quality items
        on sale just like at Nordstroms. Always LOVE A SALE…

        Kindest regards,

  5. Kevin Beck says:

    This strategy worked very well for me this week…Apple, Raytheon, Core Labs, IAC Interactive.

    • Keith says:

      Way to go Kevin and thanks for sharing!

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  6. RMU in NH says:

    Not sure what you mean by no-load brokerage account, Go to Fidelity.com, or other big brokerages that have on-line trading. You can sign up right on-line. I use Fidelity.com and they charge $7.95 per stock trade regardless of number of shares. They will reinvest dividends of most stocks to purchase additional shares with no fee imposed. You can buy bonds, ETFs, mutual funds (many that ARE no-load) and even sign up for options trading if you are well versed in that area. Volatile markets are a gold mine for options.

    • Keith says:

      Thanks for jumping in here RMH.

      That’s what makes Total Wealth such a great place to be – subscribers sharing perspective and helping each other.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  7. chad says:

    why not sell the puts for the stocks you want to own (with strike price you are willing to own the stock at). this is the bests of both worlds. you collect the premium from the sale, and if it hits your strike, you buy the stock. not only did you purchase at the price you want, you also immediately decreased your cost bases due to the premium you collected.

  8. Heinz Otzen says:

    I will try your idia

  9. Dan says:

    Hello, kieth,
    Just to let you know I like your idea of low ball order, it really makes a lot of sense. It works for me I been using it, Also, I’d like to thank you for giving out bonus recommendations, I made 100% profit for the first time, please keep it coming.

  10. John B. says:

    Hi from Yorkshire,UK

    Excuse my ignorance. But

    Where does the money come from for inverse ETF’s?

    Kind Regards and thanks for your advice.

    John B.

  11. Gigi says:

    Hi Keith,

    How can you put low ball orders with this new “Enhanced price checks” ?

    “Enhanced price checks are designed to prevent the acceptance of limit orders that are priced a certain percentage away from the National Best Offer (NBO). Conversely, limit orders to sell will not be accepted by the Exchange if priced a certain percentage away from the National Best Bid (NBB).
    As described in the Table below, the price check for securities priced $25 or less will be 10 percent above or below the current bid (selling) or offer (buying); for securities priced above $25 up to and including $50, the price check will be 5 percent; and for securities priced above $50, the price check will be 3 percent. These percentages are based upon the numerical guidelines for clearly erroneous executions under NYSE Arca Equities Rule 7.10. Limit orders which exceed price check thresholds will be sent back to customers as rejections.

    These changes will go into effect on Monday, July 18.”

    Thanks,
    Gigi.

  12. KAN says:

    You are awesome; love this!!!

  13. Edd Clark says:

    Tell me if I have this Low Ball thing right. I decide which stock I want to purchase, the low-ball price that I am willing to pay, and the number of shares I can afford to purchase at my low-ball price. Then I place the order while making sure that I keep enough cash in the account to pay for the shares I have ordered?

  14. James Carr says:

    If you qualify as a “preferred” customer based on total of all accounts there is no charge for buy or sell at Bank of America Merrill Edge online exchange linked go checking account. Why pay $7.95?

  15. Scott Stockton says:

    You are so right, Keith. I had a limit order on IHS at $100 that had been in place for nearly 3 months. It has been consistently trading in the $130-$140 range for the last 6 months. When the market tanked,, it filled for $99.11. And guess what…it’s already back up to $133. Roughly 34% up in just a few days!

  16. Scott Stockton says:

    I meant IHF.

  17. EMMA OKEEFE says:

    Keith until today I had not heard of your low ball deals and I was sure I had invented it and had been calling it going fishing. Regards

  18. Tom Bryant says:

    Keith, I did this on Disney, Alibaba, and American Express. What bargains. And the high velocity picks are blowing me away. I’m up about 14% on one and 7% on the other after first week after taking my position. I know it’s just the first week but what a start!

  19. Pam says:

    I think Edd makes a good point to keep in mind. You have to keep enough cash in your account to make the purchases if everything goes down enough at the same time to trigger your orders.

  20. Don Klinger says:

    In a portfolio of $500,000 what % should be in cash so we can avail ourselves of a Tanked Market ??

  21. John Stuart Butler says:

    Hi from Yorkshire (UK)

    When you say “Keep plenty of cash at hand”

    Are you meaning real money kept ‘under the bed’?

    Or in the Bank/Trading account?

    Do you also say ‘Europe is toast’ mean the UK is included?

    Kind Regards

    John B.

    P.S. Your work is very good – Thanks

    • Regina says:

      Yes, John. The money will need to be in the Brokerage Trading account to pay for the purchase if the price is hit. That is one of the purposes of a ‘cash stash’ in addition to risk reduction. Of course, you do have 3 days to settle (but hoping to sell other stocks to free up the cash on the same day that lowballs hit will only lose money on them; and you do have to know that the order hit so you are timely). You could also transfer funds into the account before the settle day if you are prepared and know the order hit. Hope that helps.

      Cheers. Regina

  22. Charles says:

    One problem with the low ball approach, at least in my trading account, is that any money committed to such a limit order is unavailable for buying any other stocks, so if it takes 3 or 4 months for your order to be triggered, that money won’t be available during that time.

  23. Mike says:

    Just set an alert in your trading account. This will not tie up your available money for trading. When the alert triggers, then place your order.

  24. Thomas says:

    I was able to pick up 30 shares of Apple at $95 on the Monday. I only wish I had more to put into that stock. I picked up 2 other stocks on my buy list using limit orders but the buys were not as lowball as that one. I do believe that this is a very good tactic when we have this volatility happening. Yes it does tie up $ in limit orders and I have had to cancel some afterwards to use the cash elsewhere but at this time I have some cash available from sales earlier. The comment earlier calling it “going fishing” is very good and I will adopt that name for this tactic….

  25. Allen Charkow says:

    This also means reserving a sizeable amount of funds in case there is a big drop in the market….quite a bit of time passed for example since the most recent drop. You can’t place conditional buy orders if you don’t have the funds in your account in case the conditions are met, can you? Meanwhile those funds can be working for you now. Did I miss something?

  26. Adrian Johnson says:

    I kind of do that already thanks again for the tips.A.J

  27. S C says:

    This sounds great.
    On the other hand, could you elaborate the effect of your proposed “Trailing Stop” under this circumstance?

  28. Rita H. says:

    My colleagues are using similar strategies for binary options. High risk but also high returns. Is it possible to use low ball strategies for long term binary options?

  29. Gary says:

    What happens if this is just the first of several legs to the downside?

  30. Thom says:

    Keith Can you please respond to comment from Gigi on August 27, 2015 at 6:49 am about Enhanced Price Checks? Thanks

  31. lang says:

    Keith hi!there,I just stumbled over your article total wealth research .com total wealth tactics,I most confess that there are a lot of things I do not understand.Please where do I further read I am none English educated reader.

  32. Kenneth DeFord says:

    Hi Keith,
    I’m very interested in your low-ball strategy. My Q is…How do you identify prospective companies for this scheme?

    Kenneth DeFord

  33. Stephen says:

    Hi Keith,

    Please forgive me if i’m writing this as I am a little confused about the low ball trading method. Is this placing a buy limit at a low price say at a low support area and placing a stop below your support area?

    Kind regards,
    Stephen

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