Articles

By: Chris Rowe — November 7, 2018

"Ricochet Profits" in this New Bull Market

Tired of the mid-term arguing?

CHRIS

Even Lincoln, my 9-year-old son... and Maya, my 12-year-old daughter have had enough of it at school!

I'm proud that they even have a clue about it because I didn't, at their age.

Social Media Drama - The Same Angst Affects Your Stock Account

The excessive negativity found on social media these days is the same type of excessive negativity that moves stock prices to deeply oversold levels during mid-term Octobers.

It pushes people away from stocks like clockwork!

Every four years, we are handed a gift of a buying opportunity.  But most people fail to truly take advantage.

The No-Brainer...

Sometimes, "market timing" is extremely easy, especially during a very routine time frame.

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I'll prove that in just a few seconds.  But first, the general stock market is not what you want to buy.

Here at True Market Insiders, we buy sectors. 

It's the perfect middle ground between taking a huge risk on individual stocks and settling for boring average stock market gains.

Investing in sector ETFs (groups of stocks in the same industry) can dramatically outperform the stock market and still outperform the big individual stock gainers.  And you get the safety of diversification.

Even if you're a stock buyer then focus on those in the strongest sectors.  Let me show you why...

At the last mid-term lows (2014), our "institutional spying" data program told me the biggest "Ricochet Profits" might be found in the Biotech sector.

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Compare the performance of the S&P 500 (red) to three biotech sector ETFs.

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Most importantly, notice how the market launches off of the October low but then seems to flatten out for the next nine months.  The Biotech ETFs continued to trend higher.

I went back 30 years to show you every mid-term October.  Scroll and scan them.

Markets either bottomed out (most common), or were in the process of jumping off the bottom.

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Then I grabbed these seasonal performance charts from stockcharts.com.

They show the average performance for each month.  They also show the percentage of times those months were "up months" (positive returns).

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The data goes back to 1990 and I can only grab 20-year time frames, so there are two ranges:  1990 - 2009 and 1998 - 2017.

1990 - 2009: 

  • The average mid-term October was up 4.2%.
  • The October - December gain was 7.2%.  The remaining months were DOWN a total of 7%!   That's not a typo.

1998 - 2017:

  • The average mid-term October was up 5.2%.
  • The October - December gain was 9.7%.  The remaining months were DOWN a total of 1.8%.

After the last mid-term election low, in 2014, I taught someone how to make "Ricochet Profits" by sector-investing instead of buying "the market".

He ended up outperforming most investors over the years!

This person was five years old and his name is Lincoln Rowe.  (He's the clean-shaven guy, below.)

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I showed him the 10 major S&P 500 sectors (exchange traded funds) and told him to pick one and give me all his money.

Of course he chose "Technology" (XLK) and got $13.85 out of his piggy bank.  (Disclaimer: He didn't use my institutional spying program.  He just chose the sector that happened to be showing the most strength at the time.)

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The only problem here is the ETF (XLK - the purple line) was trading around $40.00.  So I shorted the stock to him as I had to take the other side of his trade.

I printed out a blank certificate and wrote XLK and the price and dollar amount so basically, since I'm liable and must give him the gains when he sells, I'm currently short about 1/3 a share of XLK from $40.00.

It's the only time in life that his gain will be my loss.

Today is election day. 

The results of the mid-term elections will have an enormous impact on which sector will be today's "Biotech of 2014".

So, I'm going to wait for institutions to react so the results can flow through to the market and give us clear signals.

The institutional spying service that I use is incredibly helpful at narrowing our focus down to the one strongest sub-sector, out of 41 sub-sectors that make up the stock market.  It's the data service that I use to find what I've been calling "Ricochet Profits".

I haven't been this excited about the stock market for four years.  (Neither has Lincoln.)

Just as we easily spotted them buying Biotech in 2014, our "True Market" view will reveal the sectors targeted by the world's largest investors, as a result of the post-midterm election results.

Rest assured, I'll be keeping you posted!

Invest easily,

Chris Rowe

CHRIS

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