A Picture-Perfect Setup… How to Take Advantage of It Now

 
"Down 62% in Four Years… Now the Most Hated – Ever… And the Uptrend Has Begun!"
 
That was a headline in my latest True Wealth issue…
 
The story has all the ingredients I want to see for a great trade. It's down 62%, making it super cheap. It's the most hated it has ever been. And the uptrend is just getting started.
 
Since I wrote that, this trade has gone from "great" to "picture perfect" – as the uptrend is now clearly in place, confirming our idea.
 
I want to share the story with you, exactly as it appeared to my paid subscribers a couple of weeks ago…
 
Again, the setup is now perfect. I urge you to read the story below and take advantage of it. Here it is…
 
Nobody's talking about wheat…
 
And that's exactly the way I like it.
 
Wheat has never been more hated than it is today… seriously.
 
My friend Jason Goepfert (of SentimenTrader) tracks investor sentiment better than anyone on the planet.
 
There has never been another day in history (going back a quarter-century) when wheat was more hated than it was at the beginning of this month. I love it.
 
One day, in August 1998, wheat was almost as hated as it is today… That's the closest comparable point in history.
 
Just two months after that 1998 "hated" extreme, the price of wheat was up 20%. That is an extraordinary move in a commodity.
 
After hitting a hated extreme at the beginning of this month, wheat has been rocketing higher (following the 1998 example). Take a look…
 
It's not just wheat… The chart for corn looks exactly the same.
 
Both of these grains are down 62% peak to trough over the last four years… But they have spiked powerfully from the bottom earlier this month.
 
We have exactly what we want to see. Corn and wheat are cheap, hated, and likely starting uptrends. So it's time to revisit an old friend… shares of the iPath Bloomberg Grains Subindex Total Return Fund (JJG).
 
The last time we put on this trade, we made 16% in five months, from January to June, as grains moved from hated to loved. Then we bailed.
 
Wheat, corn, and soybeans are the three grains that make up JJG. We have the setup we want to see.
 
We can set up a great reward-versus-risk trade here… As I write, JJG is trading not far from its recent closing low of $26.67. That's only 2.7% away from its current price. We will set our stop loss there.
 
Our downside risk is only 2.7%. And our upside potential is 25% within 12 months. That's an incredible reward-versus-risk setup – particularly when you consider that grains like wheat have literally never been more hated… I love it!
 
Buy the iPath Bloomberg Grains Subindex Total Return Fund (JJG) today. If JJG closes below $26.67, then sell the next day. Plan on being in this trade for 12 months or until we hit 25% gains, whichever comes first.
 
Remember, these numbers above are directly from my True Wealth newsletter from a couple of weeks ago. The important thing is that the principles are still the same today, and again, the setup is even better, as the strong new uptrend gives us more confidence in our idea. Take advantage of it with JJG!
 
Good investing,
 
Steve
 
Editor's note: Steve has found another incredible opportunity in the market. It's a "secret currency" that some of the world's wealthiest families are buying. It's one that few Americans know anything about. It's beyond the reach of any government or corporation. And in the past, it has delivered returns of 500% to 1,000%. Get the story here.

Source: DailyWealth

How to Take Back Your Unclaimed Money in the Stock Market

 
"How much unclaimed money do you have in the stock market?"
 
That's the question I asked an audience of several hundred people in Las Vegas last month. I wasn't joking.
 
If I've learned just one thing from researching investor performance over the years, it's that investors are leaving money on the table all the time… with nearly every investment they make.
 
Let me show you what I mean, and how you can stop leaving your unclaimed money on the table today…
 
Investors tend to leave money on the table in two ways: selling at the wrong time and investing the wrong amount.
 
Let me illustrate my point with the story of one investor who recently shared his investment history with me…
 
Mark is a pilot for a major domestic airline. He has been investing on his own for seven years. Like most of us, he has a hard time keeping up with his portfolio given his other responsibilities.
 
In spite of the challenges, though, Mark has done a decent job. Over the past seven years, his account is up more than $181,000. The problem is, he's leaving thousands of dollars on the table with his trades…
 
Let's look at his investment in drugstore chain CVS Health (CVS). Mark bought CVS shares in early 2011, originally buying about $2,700 worth of shares. As of last month, his investment was worth around $6,800 – a gain of 150%. Take a look…
 
During these years, Mark made good money with CVS. But he could have made even more…
 
The first way to claim more money would have been to invest more money.
 
TradeStops software uses a volatility-based position-sizing algorithm. In other words, it helps investors put more money into conservative investments and put smaller amounts of money into more speculative investments.
 
CVS was one of Mark's more conservative positions. Its volatility was relatively low when he bought it, and it grew lower over time. Based on his portfolio size, TradeStops determined that Mark could have invested $17,200 in CVS. That would have turned into $43,000.
 
The second opportunity Mark had to maximize his gains was to sell CVS at the optimal time.
 
CVS did well for the first four years Mark owned it. But shares started to fall in 2015. When that happened, it triggered TradeStops' trailing-stop system. That system would have told Mark to sell shares in September 2015 for around $98.
 
But Mark stayed in the trade.
 
By putting more money into this conservative stock and exiting based on an intelligent trailing-stop system, Mark left an extra $21,700 of profit on the table for this one investment.
 
When we took all of Mark's current investments and applied intelligent position-sizing and stop-loss strategies, we found an even more compelling picture.
 
Using his exact same investments with the exact same entry dates – only changing the amount invested in each position and the exit point – Mark could have claimed an extra $132,600 from his portfolio.
 
Meanwhile, TradeStops would have taken all of the guesswork out of Mark's investment decisions.
 
So ask yourself… how much unclaimed money are you leaving in the stock market?
 
Regards,
 
Dr. Richard Smith
 
Editor's note: Richard's TradeStops software does more than simply track your trailing stops. It can also automatically optimize your portfolio to meet your goals. If you want to stay in your winning trades longer, dump your losers faster, and manage risk like the pros, you HAVE to give TradeStops a try today. Richard has graciously agreed to offer DailyWealth readers a 100% risk-free, 60-day trial to give it a "test drive" for yourself. Get the details here.

Source: DailyWealth

Gold Isn't a Buy Yet… But It's Close

 
"I personally sold all my gold stocks yesterday," I announced to the crowd of hundreds at the Sprott Natural Resource Symposium at the end of July.
 
My timing was nearly perfect… The price of gold peaked just a couple of days later.
 
The story was the same with silver…
 
"Expect double-digit losses in silver by the end of 2016," I wrote at the end of July here in DailyWealth. A couple of days later, the price of silver peaked as well.
 
Since then, gold and silver have fallen apart…
 
Gold fell eight days in a row recently, and it is now below its 200-day moving average (a common signal of a bear market). Silver is just as bad… My prediction for double-digit losses has already come true, and it has only been 11 weeks.
 
The carnage in precious metals investments has been terrible. The question is, has it been terrible enough?
 
Have the losses in gold and silver been punishing enough to create a short-term buying opportunity?
 
We hold gold for the long term in my investment letters (though we did sell half of our position in gold stocks for a 100% gain in seven months, which turned out great in hindsight).
 
But what about the short term? Has the recent terrible performance created a short-term buying opportunity?
 
In short, NO. Not yet
 
Investors still LOVE gold stocks – and that's the problem. When everyone has bought, nobody is left to buy… nobody is left to push prices dramatically higher.
 
I measure this by looking at the movement of REAL dollars to see what investors are thinking. And real dollars are still flowing into gold stocks…
 
For example… This week, we reached a record high in the shares outstanding of the leading gold-stock exchange-traded fund (GDX). In other words, more money wants to be in this fund than ever.
 
The same is true with the price of gold itself… Large speculators in the futures markets are still overly committed to bets on higher gold prices. Take a look…
 
Typically, you want to consider selling when bets are extreme like they are today. Like I said, when nobody is left to buy, nobody is left to push prices much higher.
 
The chart for silver is the same… Large speculators haven't given up on silver yet, either.
 
Personally, I look forward to getting back into gold and gold stocks with my own money… They have fallen, a lot, and I believe we're at the early stages of a major long-term bull market in gold stocks.
 
But even after such a fall, and even with my long-term outlook, I personally can't get excited just yet…
 
As you know, ideally I want to buy what's cheap, hated, and in an uptrend.
 
Unfortunately, gold is still loved… And it's still in a downtrend.
 
With those two things against me, I can't step up and trade gold today.
 
I will let you know when the right time finally arrives… but we aren't there yet.
 
Good investing,
 
Steve
 

Source: DailyWealth

The First Step to Truly 'Getting Rich'

 
Thirty years ago, I made "getting rich" my No. 1 goal.
 
I got the idea from Dale Carnegie's advice in his book How to Win Friends and Influence People. He said that most people fail to achieve their dreams because they don't set goals. But he also noted that some people fail because they have too many goals.
 
The latter was my problem at the time. I wanted to be a published writer, a teacher, a philosopher, a martial artist, and a world traveler. And ever since I was a kid, I had wanted to be rich. Carnegie's advice was to narrow my objectives down to three, and then two, and then one. And make that my top priority.
 
It was a challenge to go through the process. But when I set that priority, everything changed. Not the world around me, of course, but the landscape of my mind. I now viewed every decision through a new lens, constantly asking the question, "Will doing – or not doing – this make me richer?"
 
Making this mental shift had several immediate and positive effects…
 
     1. It changed my values.
 
The pride I had once taken in industry editorial awards now seemed like arrogant vanity. My natural inclination to challenge every rule was modified by the pragmatic consideration of whether the rule actually made financial sense.
 
And my loyalty to our company's employees was superseded by a respect for and loyalty to the company's customers. I now understood that making our customers happy would help the company become more profitable. And that, in turn, would help me get rich.
 
     2. It changed the way I saw my role in the company.
 
I had been spending about four hours per day working with our writers to improve their style and fix their grammar and punctuation. I now realized that stylistic and grammatical improvements would not make the company more money.
 
So I began focusing on other aspects of the business, like how we could use our editorial copy to support our marketing efforts… and how our marketing could be improved with big, exciting editorial ideas that would appeal to our readers.
 
     3. It changed the way I used my time.
 
I was in the habit of showing up 15 minutes late and leaving 15 minutes early. After the change in my mindset, I began working about 65 hours per week, beginning each workday at 9 a.m., working until about 8 p.m., and working at least half a day on Saturday and Sunday.
 
     4. It changed the way I viewed my working relationships.
 
Talented employees who did ordinary work began to irritate me. (Why couldn't they work harder and be more useful to the business?) And my feelings toward the company's owner morphed from repressed resentment (as a working-class kid, I disliked and distrusted all "rich" people) to cautious admiration (he had, after all, accomplished that which was now my life's goal).
 
     5. It changed the way I made decisions.
 
With "getting rich" as my top priority, almost every decision I made became clear and easy. The same will be true for you. All you have to do is ask yourself a simple question: "Will this make me richer or poorer?"
 
I'm not just talking about the obvious wealth-building decisions. This works for most of the little decisions we all face every day.
 
Consider this example…
 
Let's say your favorite leisure activities are golf and tennis. You can afford to join one club. Which should you choose?
 
You might tell yourself that it makes no difference. But if you have your priorities in order, you will know that you can't afford to play golf regularly because golf takes too much time. On average, it takes twice as much time as tennis.
 
In the short run, this may seem insignificant – a difference of three or four hours per week. But over a year, that difference amounts to 150-200 hours. Hours that could be spent becoming your company's best employee or starting a side business.
 
Every day, you make hundreds of small decisions that either add to or subtract from your eventual wealth. Most people, most of the time, never stop to notice. But if you do notice and make the right decisions, you can greatly accelerate your journey to wealth.
 
It begins by making "getting rich" your top priority.
 
Regards,
 
Mark Ford
 
Editor's note: Mark has been studying the secrets to getting rich for more than 30 years. He and his team at the Palm Beach Research Group recently launched a program to teach you how to follow his blueprint. Learn more here.

Source: DailyWealth

How I Know When I'm Wrong – And How I Get Out

 
I told you what I look for to "get in" an investment here and here. But what happens if things go wrong? When do I "get out"?
 
Let me turn the question back on you… When do YOU get out? At what point do you KNOW you're wrong?
 
What? You don't know?
 
This is YOUR MONEY. You worked hard for it. And you're just "winging it"? You're just "shooting from the hip"? Really?
 
We've got to change that, RIGHT NOW…
 
I have a perfect example of how I know I'm wrong in a trade… and when it's time to get out.
 
The example is real. My paid subscribers just went through it last week. I will tell you what the investment is – but frankly, that doesn't matter. What matters is the lesson.
 
Less than a month ago, I recommended that my subscribers buy the British pound…
 
The British pound had fallen to its lowest level in 30 years. And it was extremely hated – speculators had placed large bets against it. But we saw the start of an uptrend in place. It was worth a speculation. So here's what I told my subscribers…
 
By setting a stop loss at the recent low, we're only risking 2.3%. But if we're right, and the pound recovers from its valuation and sentiment extremes, we could easily see double-digit gains… We have a risk-to-reward ratio of roughly 4-to-1. And that's too good to pass up.
This is how I trade. It's all about the odds…
 
When you have the setup you want to see… and your upside potential is four times your downside risk, you enter the trade.
 
So we entered the trade. But we got stopped out at the recent lows (a 4% loss). No big deal. Then, the big deal arrived… The bottom fell out of the British pound. Take a look…
 
You can see the British pound had hit new lows in July and August. When we entered the trade in September, I said to GET OUT if the British pound closed below those lows because that would mean I was wrong.
 
The British pound closed below those lows. It was time to get out. People who followed my advice lost no more than 4%.
 
After that, the bottom fell out… And the British pound kept falling, and falling, and falling.
 
So let me ask you again… If you are "just winging it" or "shooting from the hip," when will you get out of a trend like this one? Now? Or will you buy more and double down?
 
What's your plan? Do you know your upside potential and your downside risk? You don't know if you don't have a plan.
 
I know when the market is telling me I am wrong about an investment idea (when it hits a new low).
 
Remember, I wait to buy until there's an uptrend in place. So a new closing low means that I am totally wrong about that uptrend. I get out the next day.
 
When are you wrong? When do you sell?
 
It's fine if your exit plan is different… But my goodness, have a plan – and follow it!
 
Good investing,
 
Steve
 

Source: DailyWealth

Investment Legend: 'Interest Rates Have Bottomed'

 
"This is a big, big moment," Jeff Gundlach said earlier this month in a webcast for his clients. "Interest rates have bottomed."
 
Gundlach is the founder and CEO of the investment firm DoubleLine Capital. He earned the nickname "Bond God" because his track record and prognostications have been extremely good in recent years.
 
But is he right? Did interest rates really bottom? Is this a big, big moment?
 
I believe he could be right. The ultimate bottom for interest rates could be behind us. But it's important to understand that predicting interest rates is tough.
 
Let me explain…
 
Gundlach has certainly earned his nickname. He has been right more often than "Bond King" Bill Gross in recent years.
 
But before you buy into his idea, consider this: This isn't the first time you've heard an "expert" say that interest rates are headed higher, right?
 
Since 1981, we've been threatened with the fear of higher interest rates from "experts" every year…
 
"Better act fast," your friendly realtor/banker/financial planner tells you. "Interest rates are going up any day now."
 
Your local experts were well-intentioned, I'm sure. But they were wrong. Interest rates have fallen relentlessly for 35 years.
 
Don't feel bad about it… Everyone believed along the way that higher interest rates were just around the corner.
 
So… let me ask you, if the "experts" have gotten it wrong, why should we trust Gundlach now? What could cause interest rates to spike from here?
 
A lot of things, actually. His theory is that, regardless of who wins the presidential election in November, government spending will soar…
 
From his recent webcast…
 
Hillary Clinton's Infrastructure Plan: "As President, Hillary will launch our country's boldest investments in infrastructure since the construction of our interstate highway system in the 1950s." $275 billion, five-year plan…
 

Donald Trump's Economic Vision for Infrastructure: "28% of our roads are in substandard condition and 24% of bridges are structurally deficient or worse. Trump's plan will provide the growth to boost our infrastructure… "

All that government spending requires government borrowing – and that means a lot more bonds. As more government bonds are issued, that will push down their prices… which means higher interest rates.
 
More important, the current bond market situation is "overly loved."
 
Investors recently placed their largest bets in 18 years on lower interest rates. (You have to go back to 1998 to find a time when speculators had a larger "long" position in 30-year Treasury bond futures than they had recently.)
 
Typically, when bets reach an extreme, the trend is nearing an end, and the opposite tends to happen.
 
So… what happened after 1998 – the last time investors placed huge bets on lower interest rates?
 
Interest rates bottomed out soon after… They went from 4.7% in late 1998 to a peak of nearly 6.8% in early 2000. We saw a similar instance in 2012 – though not as extreme – with similar results.
 
The point is that while making interest-rate predictions is hard, the facts back up the case this time.
 
The "Bond God" believes the bottom in rates is behind us. And I agree.
 
Good investing,
 
Steve
 

Source: DailyWealth

How to Trade Like You Have a Sixth Sense

 
Don't fall for these headlines…
 
The New York Times recently reported that "trust your gut" could be profitable advice on Wall Street… while the Financial Times described "gut feelings" as key to financial trading success.
 
Successful high-frequency traders may have a sort of "sixth sense" that they use to take in information and make snap decisions. For a certain group of investors, "trust your gut" may make them money.
 
However, the vast majority of us don't have this sixth sense. Instead, most people make terrible investing decisions when they listen to their "gut"…
 
The biggest trap we fall into is something called "loss aversion."
 
My friend Dr. Sue is a good example of this. Instead of cutting her losses early, Sue watched as her entire portfolio tanked. She was so afraid to make a mistake that she just kept watching her losses get bigger and bigger.
 
Her story highlights one of the most common mistakes (and among the hardest lessons to learn) of investing.
 
Loss aversion is a well-known phenomenon. It has been studied and reported on in financial and economic literature. Yet it trips up educated and ignorant people alike. It's very human. And if you're not aware of it, you'll lose thousands of dollars before you know it.
 
Loss aversion goes hand in hand with something else called the "disposition effect."
 
The disposition effect basically means that people hate losing far more than they like winning. It's the basic principle behind why people can lose their shorts in Vegas – they're more likely to take a gamble when they've been losing.
 
Sue was gambling with her portfolio, in a sense. Instead of cutting her losses, she kept "gambling" on the chance they would bounce back. So her losses kept adding up.
 
This kind of behavior stems from fear – fear of losing money and of making mistakes. And fear comes from a tiny part of our brains called the amygdala.
 
Here's my secret: You don't need a sixth sense to figure out how to be a good trader. You just need to follow three simple steps…
 
1.  Control your fear.
Your amygdala senses threats, and your brain releases chemicals that trigger the "fight or flight" response… You get sick to your stomach, your pupils dilate, and you want to run and hide. Learning to calm your amygdala helps you evaluate things more logically, without falling prey to fear.
 
Meditation is my favorite way to reduce the activity in the brain's amygdala. The amygdala is also a contributor to anxiety disorders and stress. Quieting this region of the brain bolsters more positive feelings.
 
A study from the National Bureau of Economic Research discovered that traders with happier, more positive moods (and thus quieter amygdalae) had better performances in their portfolios.
 
2.  Use stop losses.
You need stop losses to best protect your investments. They take all the emotion out of your choices – instead, when your stock hits a stop, you sell. No questions or hesitations.
 
There are two types of stop losses: hard stops and trailing stops.
 
Hard stops use a set price or percentage below the purchase price. If the stock falls to that amount at any time, you sell. Trailing stops use a percentage below the purchase price, but they don't stay the same. As the price rises, the trailing stop follows it.
 
3.  Spread out your wealth.
Asset allocation is how you divvy up your capital among several categories of assets. Changes in the market get smoothed out by the diversified nature of your portfolio… leaving you to sleep well at night.
 
The key is doing it from the start and sticking to it.
 
First, you should set aside some cash for emergencies… Then, start with a simple allocation: Decide between stocks and bonds. When someone is starting off, I suggest using a "middle of the fairway" asset-allocation plan: 60% stocks and 40% bonds. It ensures you will harness the proven wealth-building power of stocks… while also using the conservative, income-producing power of bonds.
 
The key is to find a balance that best suits your risk tolerance. And remember, don't sink all of your 401(k) into one company or one sector – if it drops, you'll lose everything.
 
You might never develop that sixth sense for investing. But if you follow these three steps, you'll be well on your way to becoming a successful trader.
 
Here's to our health, wealth, and a great retirement,
 
Dr. David Eifrig
 
Editor's note: My $3,000-a-year Retirement Trader service is aimed to teach regular folks how to safely create income in retirement. These techniques are easy to learn and use… And they can drastically improve your investment results.

If you aren't sure if these strategies are right for you, consider picking up a copy of my book High Income Retirement for just $25. In it, I'll walk you through how to use these techniques to generate safe and steady income. Click here to get your copy delivered for cheaper than it's selling for on Amazon.

Source: DailyWealth

Get the Upside of Commodities WITHOUT the Downside

 
Do you realize just how much commodity prices have crashed?
 
Commodity prices have gone down five years in a row, according to the Bloomberg Commodity Index.
 
Since peaking in 2008, commodities have lost an incredible two-thirds of their value.
 
But times seem to be changing…
 
So far in 2016, the Bloomberg Commodity Index is up about 10%…
 
Could the bottom be in? Could now be a good time to buy? It could be…
 
Commodity prices can soar just as powerfully as they can crash… From 2002 to 2008, commodity prices rose 170%.
 
Wouldn't it be great to get the upside of commodities without any of the downside risk?
 
My friend Frank Trotter thought so… and he and his team at EverBank World Markets came up with a solution.
 
I caught up with Frank to get the basics of the idea…
 
Steve Sjuggerud: Frank, can you tell me the basics of your MarketSafe CDs?
 
Frank Trotter: The basic idea with all of our MarketSafe CDs is to give you the protections of a CD – like FDIC insurance and principal protection – but also to add some upside potential, too.
 
Sjuggerud: Your newest MarketSafe CD is focused on commodities. I think your timing with this CD looks pretty good, by the way. Can you tell me a bit about it?
 
Trotter: We hope our timing in commodities is good… We hear many clients feel strongly about the opportunities for commodity-value increases… But it's nice to know that your principal is protected if commodity prices don't go up, or if one of those black swans lands in your pond. Our new MarketSafe CD is based on the return of six separate commodities – gold, silver, copper, nickel, soybeans, and sugar. It's important to note that you don't get ALL of the upside potential…
 
Sjuggerud: I get it… If you are going to protect the investor's downside risk, then you can't give them all of the upside potential as well.
 
Trotter: Yes. That's right. Instead, there's a formula that limits the maximum that we can pay out on this CD. We explain it all, and give a few examples of possible outcomes, on the Term Sheet.
 
Sjuggerud: I will share a link to your website about the CD. The last commodity boom lasted from about 2002 to 2008 – or six years. What is the exact term of this CD?
 
Trotter: It's a five-year CD. It's called the "5-Year MarketSafe Focused Commodities CD."
 
Sjuggerud: Great. Thank you, Frank.
 
Commodities are cheap, hated, and in the start of an uptrend this year… The timing could be just what we look for.
 
If your main concern is protecting your principal, but you would like to participate in some of the upside that commodities could provide in the next five years, consider EverBank's latest MarketSafe CD…
 
You can check out the details on EverBank's website here, or you can speak with a person at (855) 236-5173.
 
Good investing,
 
Steve
 

Source: DailyWealth

Three Simple Rules to Improve Your Investment Results

 
A lot can go wrong when you're deciding how to invest your money.
 
A range of investment pitfalls can destroy your wealth.
 
Today, I'll discuss three of the most common mistakes investors make – and I'll explain how to minimize the damage they can cause to your portfolio…
 
1.  Regretting your buys
Once you've entered a buy order, it is common to be flooded with a range of emotions – excitement, pleasure, anxiety… or deep regret. "Did I just buy the right stock?" "Am I the sucker who just bought at the top of a market bubble?" "What if this company is a total lemon?" All this worrying – or "buyer's remorse" – can be damaging and could lead to an impulsive, emotional decision to prematurely sell a stock.
 
Just as you would do when you buy anything from a refrigerator to a new car, do your research. Understand what you're buying and create an exit strategy (like a stop loss).
 
2.  Doing what everyone else is doing
People tend to follow the herd. It's human nature to think that the majority is doing the right thing. This crowd mentality is one of the reasons market bubbles form. When everyone is bullish on a stock, prices skyrocket. Of course, it works the other way, too.
 
But just like Mom and Dad always said, just because everyone else is doing it doesn't mean it's the right thing to do. Do research and form your own opinions.
 
3.  Assuming that someone else cares about your money as much as you do
One of the most expensive phrases in the English language is, "My financial adviser is taking care of my money."
 
Your adviser isn't your friend. You're just a bag full of money, and he's trying to get as much out of that bag as possible. That doesn't mean you should ignore your adviser. He isn't out to get you. But he does want to generate fees for his company.
 
At the end of the day, you're the only person who has your best interest in mind. Ask questions. Read the fine print. Ask your broker or adviser to lower his fees. Make sure you understand what you're buying.
 
Of course, there's no way to guarantee that every investment decision you make will turn out as you had planned. But taking these steps will help you grow your portfolio over the long run.
 
Regards,
 
Kim Iskyan
 
Editor's note: The Truewealth Asian Investment Daily team recently published a free report showing readers how to avoid some of the most common pitfalls in investing. You can gain free access to this report right here. And if you'd like to sign up for their free daily e-letter, click here.
 

Source: DailyWealth

Exactly What I Want to See in a Trade, Part II

 
I'm glad you want to hear more about finding good ideas…
 
Yesterday, I shared an example of how I size up a potentially profitable opportunity.
 
Readers wanted more… So let's take a look at another investing idea today…
 
You probably know by now that I look for three things in an investment – I want to see an investment that's 1) cheap, 2) hated, and 3) in the start of an uptrend.
 
The investing idea we're looking at today is cheap… It's down about 85% since 2007 (from around $140 to around $20). Take a look…
 
After an 85% crash, you can imagine that this investment is also extremely hated by investors… And this hate is what gets me interested.
 
You see, if you want to make triple-digit returns, you can't buy what everyone already loves… The biggest gains happen when things go from "bad" to "less bad."
 
And in today's example, things are BAD…
 
"It has never been a worse time," a CEO in this industry said in a Reuters news story this week. "At the moment, nobody feels the need to buy and the price is lower every day," he continued.
 
He's right… Over the last year alone, the price of this investment has fallen 42%…
 
So this idea is clearly cheap and hated. But is it in an uptrend?
 
Obviously not. It's hitting new lows every day.
 
This idea ticks the first two boxes. But because we don't have an uptrend, the idea simply goes on the "watch list." It'll be a trade someday… but not today.
 
What is this idea? It is uranium.
 
Legendary resource investor Rick Rule made the long-term case for uranium at our Stansberry Conference in Las Vegas two weeks ago. He said…
 
Uranium… You make the stuff at $65 a pound, and you sell it for $25 a pound. That means you lose $40 a pound, and you do that 190 million times a year.
 

So… how many people here believe we're going to have electricity in six or seven years? [Most hands go up.] That means you believe that the price of uranium – the stuff you make electricity out of – goes up. No second choice.

That's the long-term story. But the short-term story is crazy…
 
You would think that if you're losing $40 for every pound you produce, you would cut back production. But the opposite has happened… thanks to Kazakhstan. Quoting Reuters…
 
Despite the plunge in uranium prices after the 2008 financial crisis and again after Fukushima, uranium production has doubled from 80-90 million pounds in the mid-1990s to about 160 million pounds last year, according to Energy Fuels data.
 

Most of that new supply came from Kazakhstan, which over the past decade has more than quintupled its output to become the world's leading source of uranium with a 38% market share…

In short, "At today's prices, [the uranium] industry is not sustainable," another industry executive told Reuters. (You can read the full story here.)
 
Uranium is incredibly cheap and incredibly hated. There's a great long-term case for it, as Rick Rule explained. But in the short run, things can get worse before they get better.
 
In the meantime, I will watch for the uptrend – the price action – to confirm this idea before any data in the market will confirm it. That's why it's so important.
 
After an 85% fall since 2007 and a 42% fall in the last year alone, we are not there yet. There is no uptrend in sight.
 
Today's essay wasn't about uranium, though. It's not about giving you a fish… It's about teaching you how to fish…
 
It's about showing you how I look for an idea… the thought process I use to decide when to enter a trade.
 
I hope you can use this thinking to know when to enter a trade… and when to stay on the sidelines.
 
Good investing,
 
Steve
 

Source: DailyWealth