This May Be Your Most Important Decision for Every Investment Editor’s Note: Editor’s Note: On Tuesday, September 24, at 8 p.m. Eastern time, my InvestorPlace colleague Eric Fry and a special guest of his are going to sit down to talk about the chaos in the markets we’ve been seeing ever since 2020… and how to prepare for even more chaos to come.
Despite the relief of this past week’s rate cuts, several headwinds – wars in the Middle East and Ukraine, the election, and more – are still swirling around the markets, and they could drastically impact the share price of just about every stock in the coming months. Eric’s special guest is convinced this could happen due to a set of alerts he’s receiving. At the event, he will further share how he gets these alerts… and how you can, too.
You can click here now to immediately reserve your spot.
To prepare for this event, Eric is joining 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 its Federal Open Market Committee meeting. Treasury yields fell in the wake of the news, and the stock market went on to hit new record highs on Thursday. Plus, Fed Chairman Jerome Powell hinted at another 0.5% of cuts this year… and even more rate cuts in 2025. That’s very bullish news for all sorts of investments. But… maybe you don’t trust that the Fed to cut another 0.25% at their November meeting… and another 0.25% at its December meeting. Maybe you smell further dissent fomenting… or have a bad feeling about November’s election reigniting inflation. If that’s the case, you may want to reduce your exposure to those market “events” and do some selling ahead of those meetings. In that case, you need an exit strategy. Recently, the guest who’s joining me for a special video event this coming Tuesday (you can sign up automatically here), told me a story about why he believes exit strategies are the most important decision for every investment, no matter what market-moving events may be coming up… Not long ago, this fintech CEO was watching a video that caught his attention. It portrayed one of the world’s most renowned traders starting a training course for two novice investors. He told me… This trader's pupils barely understood the stock market. But given the trader's expertise, I expected that he would have them prepared for trading greatness. After all, every budding investor wants to learn from people who have traded professionally and successfully for decades. However, when the three of them gathered for their first lesson, my guest couldn’t believe his ears. As he shared with me, the trader’s first question to his two students was simple… “What companies are on your list to buy or trade?” The students eagerly rattled off a couple of “meme” stocks, Apple Inc. (AAPL), and a few well-known retailers (not all of which were actually still in business). The trader then asked the following question… “How do you want to enter your position?” Despite all of his experience, my guest went on to tell me that the trader “broke a cardinal rule of investing” by asking that question. The most important question, this fintech CEO says, is never how or where you want to buy a stock. “This is because the most important part of a trade is never the entrance,” he says. “It’s the exit.”
Know How and When to Exit a Position No matter how long you’ve been investing, 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 our gains, should our position go sideways.
And – it doesn't matter how good you are – a position can always go sideways.
If anyone says that they have a perfect trading record, you should ask for proof. If anyone says that this is the easiest thing in the world, then you should walk away.
Trading is very hard. Investing is equally tricky. That's 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 littered with stories of people who didn't take profits off the table and became too psychologically 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.
Keep in mind that in the stock market, no company remains on 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 pulled a specific example out… Take a stock like Nokia.
There was a time that this company traded just shy of $60. It crashed after the dot-com bubble burst. But it did give investors a nice pop in 2007 and pushed back to $40 from the $20 range the year before.
Guess what happened next? Despite being one of the leading mobile companies globally, it suddenly found itself facing new competition from a company called Apple.
Nokia cratered. It hasn't traded above $10 for 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 multiple ways to exit a trade or position in order to avoid the fate of holding on so long that you watch your profits evaporate. Knowing when to ride your winners higher – and when to take profits to avoid losses – is much more important, my guest says, than what stocks you buy… or even when you buy them. That’s why on Tuesday, September 24, at 8 p.m. Eastern time, I’m going live with my guest – one of the best fintech minds in the business. During that special event, he will reveal a breakthrough technology that can help you can squeeze the maximum profit potential from both your current and future trades… While also alerting you to the next big selloff… before it occurs. The story I shared with you today offers just a hint of this tech’s full powers. You can click here to automatically reserve your seat for that event now. Regards, | .png)
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