"Do you want to make 30% a year with no effort? Of course we all do." Said Trader Z.
I'm offering you here a secret to make 30% a year every year consistently with almost no effort. For such a great offering, I'm asking not $1000. Not even $500. Not even $100 which you probably think is very reasonable. Now hold your breath. I'm asking your $0. That's right. Zero. Nada. Nothing. In fact, if you order in the next 20 minutes, you'll get another secret mailed to you absolutely free.
I've had such an idea for quite some time. The idea is to buy a big gap-down or spike-down of a stock, or preferably a market, after a severe sell-off in the preceeding days. In my experience, the probability for an sizable immediate gain is 100%. If you do this a few times a year, you'd make 30%. With almost no effort.
Have I done it? Not really. The hard part is to have the guts to jump in when the sky seems to be falling. The harder part is to have the stomach to incur some initial loss, even big loss, so you don't miss the boat altogether. The latter is the core of my problems: I always wait too low and even if I had a good price initially, I'd move lower and lower when the toad is approaching.
I've watched the stupid gold stocks intently in the last few days. I felt they're way over-sold. Yesterday when futures were limit-down and markets the world over were crashing, I felt that gold stocks offered exactly such a panic buying opportunity.
But I missed it again because I waited too low. The toads went into the green in about half an hour and went up almost 10% more 2 hours later.
See for yourself. And tell me if you can make 30% a year. If you have the guts and stomach. And now send me a check for $0.
After another sad miss, I thought about the thing a bit more. In order for me to hopefully have more confidence for such trades next time, I came out with some Z's Laws of Panic.
First, the toads always reverse fast, very often right away. So get in early and get in big.
Second, the longer you hold your position, the more money you'll make. You're likely to get a good price some time during the day and very possibly you'll get a better price the day after. Therefore, be confident to get in and be confident to hold.
Third, very likely, the toad would go into the green on the day. This should anchor your expectations on the low end.
Another example from yesterday, though not as compelling as the gold stocks. Tons more if you care to look yourself.
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