Buy and Hold is Dead — Here’s a Better Way
It’s no secret the stock market is struggling — along with millions of investors.
Every trading research service I run saw losses.
But a few losses aren’t putting an end to our gains.
In fact, I want to share with you a unique strategy that is crushing the stock market.
One group of trades generated over a 100% return by placing simple trades. Meanwhile, the stock market is down 5% over the same time frame.
And I want to show you how it’s done.
Because if your goal is to generate big returns and outperform the stock market, this is the way.
Most investors are taking the buy-and-hold approach during this volatile time.
But that’s old news.
I see a far better way to beat the market over the long term.
Don’t get me wrong, buying a broad stock market index and holding is fine. Your gains will be on par with the average market return.
But if your number one goal for investing is to beat the market, then buy and hold isn’t going to get you there.
Profit stacking is a better way … let me show you.
The End of Buy and Hold
Most people are buy-and-hold investors. Let’s take a look at a hypothetical portfolio.
Let’s say Jack held three positions over the last 12 months and saw returns of 11%, 30% and 49%.
The average return for the year would be 30%. Not bad.
But what if Jack could stack those up — 11%, plus 30%, plus 49%, totaling 90% in returns. That’s a lot better.
But you can’t do that if you’re sticking to a traditional buy-and-hold strategy.
That’s not the case when you are trading though. And I’m going to show you how it easy it can be.
The Power of Profit Stacks
I call my strategy “profit stacks.”
A group of trades, maybe two to four, that line up each year so that you can make one trade after another. Your rolling over your total capital into the next trade.
This time Jack places one trade and makes an 11% return in a couple months.
Now Jack takes those gains and rolls it into the next trade. He grabs a nice gain of 30%.
Again, he rolls the original capital and the gains into a new trade. This time he hits a 49% gain!
In total, that’s a 90% return.
If you rolled over your winnings into each trade like Jack did, you’d be up 115%. That’s because profit stacks uses the power of compounding to see market crushing returns.
And remember, these are all simple trades. Jack didn’t use any options. He didn’t have to jump into the confusing futures market. Or risk his home trying to short a stock.
Just simple trades you can do in normal brokerage accounts.
And here’s the thing, I didn’t make up Jack’s trades.
These were actual results from my trading research service, Automatic Profits Alert.
It is tough to find the perfect set of trades to compound each year. That’s why I studied the market and use seasonality to create groups of profit stacks. I find up to six groups each year that allow us to compound the returns for each profit stack every single year.
Crush the Stock Market with Profit Stacks
The trades I used above were from July of last year, until March 23 of this year.
We started with an opportunity to profit from weakness in the materials sector.
It was the bearish seasonal trend for the sector, and we bought an inverse exchange-traded fund (ETF) that rises as stocks headed lower. It handed us the first 11% gain in less than a month.
Then we jumped into the prime season for the biotechnology sector, Paratek Pharmaceuticals Inc. (Nasdaq: PRTK).
We picked up the stock in October and then sold on March 3 for a 30.95% return.
Then we jumped back into the bearish materials trade using the same inverse ETF on March 10, and held less than two weeks to March 23 for a 49% return.
By using the profit stack method, where you roll from one trade to the next, the gains from these three trades compounded to more than a 100% gain since July 25.
Meanwhile, the stock market is down 5% over the same time frame.
Now you can see why I’m not content with a traditional buy and hold strategy.
It’s the difference of a 30% average return or potentially crushing the stock market — even as we experience one of the worst crashes in history.
And I want you to join me. Click here to view my special presentation to learn more about my profits stacks strategy.
Chad Shoop, CMT
Editor, Automatic Profits Alert
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.