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How to Win the Investment Game

Published on May 29, 2009

How to Win the Investment Game

May 29, 2009

Sometimes it is good to reflect upon your thoughts on how you thought the future will look like. One doesn’t have to be right all the time, but ensure that when you are right, you are right big time and when wrong, the losses are limited.

  • Win (W) = Right (No. of Times= T) x Extent of being right ($)
  • Loss (L) = Wrong (T) x Extent of Loss ($)

As long as Win (W) > Loss (L), you are winning the game, consistently, time and again. And if you allow the “Power of Compounding” to work for you, it doesn’t take long to reach your SMART (Specific, Measurable, Achievable, Realistic and Time Based) goals.

Though I have several examples over 32 months history of this blog, I would like to point out my 3 projections of the future where I have been right resulting into good sums for those who could follow it.

  1. treasuries yield-vs-dow-and-spOn Dec 29th,2008 I announced there was bubble in treasuries which is waiting to be burst. 5months later the $USB are down almost 18%. The picks I mentioned in that post a) Rydex Inverse Gov Long Bond Strategy Inv (RYJUX) is up almost +30%, b) ProFunds Rising Rates Opp Inv (RRPIX) about 41% and c) OPN pick ProShares UltraShort 20+ Year Trea (TBT) is up +50%. It was one of the sure shot bet as in order to make money, money had to just leave “safe-heaven” and go to any other asset class no matter which one.
  2. education-vs-dow-and-spIn thick and thin of Deep recession talks, I mentioned about Education & Training sector that was defying all sign of recession per se. I mentioned about APOL that if everything is good why there was huge selling in the preceding for wks (around $88 and now it is $56.43 as of close yesterday). Since then APOL is down almost -30%, ESI almost -25% and STRA is down almost -18% while Dow is up +2.5% and S&P500 is up +7.5%. Valuations are still rich but sure enough those are lower than what those were in Jan’09.
  3. My next major projection was on GMCR. It hasn’t made any large move since I first talked about it. The jury is still out there and we’ll see what happens next on this. Contrary to Break-outs, it is sometime difficult to say when exactly the bear will take the lead and hence it is better to go for limited risk spread ideas on this so that even if you are wrong, you don’t lose much.

I won’t talk about the GOLD bullishness now. It’s in a trading range and has some strong resistances to clear before a “mad rush” starts; at the same time due to big names (John Paulsons, David Einhorn’s to name a few) moving into Gold, it is one of the hot names these days. Money is made when things are not visible to Wall Street /Main Street and then let the power of compounding work for you. At times it is contrarian while other times it may be riding on the trend that is just starting.

US GDP numbers are due today at 8:30am EST.  Markets are all set to ignore the data, isn’t it? when last numbers were worse than expected markets didn’t bother much.

Stay connected, I do have one investment idea that’s been creeping up slowly, still in the early stage of growth and biggies are piling on to grab as much share as they can before the company take on the world.

Profitable Trading, OP

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