There are many ways to play the stock market but I personally favor those that provides me with the highest probability of return at the lowest risk possible. Most of you are probably thinking - "Sounds like bunch of baloney". Well stick with me and let me show you how to actually achieve it.
There are basically two ways to to invest while balancing risk and return. 1) Find the momentum stock and trade with the trend at the right time. 2) Purchase what is hit the hardest at the right time.
To maximize your return you need to learn how to do both and preferably in markets around the world.
Step 1: Determine which investment vehicle has the highest momentum and which has been hit the hardest. You want your money in momentum vehicles until the timing is right to transfer into hardest hit vehicles.
Momentum Vehicles: Housing, USD
Hardest Hit Vehicles: Stocks, Oil, Gold
Step 2: Review the timing for hardest hit vehicles
Stocks: NASDAQ (Not right time), NYSE (Right Time), TSX (Almost Right Time)
Oil: (Almost Right Time)
Gold: (Not Right Time)
Step 3: If the hardest hit vehicle is at a right time determine which specific product type to invest in.
Since the NYSE is at point where the upside potential is higher than then risk we need to determine which stock would benefit most from devaluation of China's currency or the rise in US interest rates. The industries that comes up are financial and pharmaceutical stocks on the NYSE.
Step 4: Find the best product
Right now in the financial and pharmaceutical industry, my suggestions are WFC (Wells Fargo), VRX (Valeant pharmaceutical), and DVA (Davita Healthcare) at the current price
Happy Trading!
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