The Best Way to Profit From the New Super Corona Virus

The Best Way to Profit From the New Super Corona Virus

Posted On December 30, 2020 11:05 am

In part 1 of this series, I explained the most important facts you need to know about the new super strain of the coronavirus, which is 70% more infectious.

In this conclusion, I wanted to highlight the best way to potentially profit from any short-term market freakout that may be coming in the weeks ahead.

The Important Difference Between Gambling & Investing

If you pray for luck in the stock market, it’s because you’re gambling, not investing.

I’ll give you a very simple example, of how to make your own luck in the stock market, which is what I did the day the market fell 2.4% on news of the new super strain of the coronavirus, before recovering 2% that very same day.

Risk Management: The Cornerstone of a Sleep Well At Night Portfolio

If you can’t stay disciplined when the market suffers one of its normal, healthy, and utterly expected short-term declines, you shouldn’t be invested in stocks period.

These are the risk-management guidelines that

  • I’ve been perfecting over seven years
  • with input from colleagues with nearly 100 years of asset management experience
  • that have been stress-tested about 300 times
  • using historical market data
  • and JPMorgan’s future risk assessment scenarios
  • and 30 and 75 year Monte Carlo simulations
  • all Dividend Kings portfolios use these risk-management guidelines
  • 100% of my life savings is entrusted to these guidelines
  • whatever risk-management rules are best for your specific needs stick with them

Once you have a bunker portfolio that can withstand virtually anything the economy or stock market can, and will, eventually throw at you, then it’s time to get rich.

The Simplest Way To A Rich Retirement On Wall Street

Once you have a sleep well at night bunker portfolio, you can focus on the three fundamentals that drive 91% of long-term stock returns.

I use a combination of daily small dollar-cost averaging to target four kinds of companies.

  • highest safe yield
  • lowest PEG (Peter Lynch’s growth at a reasonable price)
  • highest ROC/PEG (BM Cash Flow Detective’s super metric combining Joel Greenblatt’s ROC with Peter Lynch’s PEG to create a single metric combining quality + valuation + growth)
  • highest discount to fair value

Then I set high priority limits on companies in these same categories, that combine as many of the proven alpha factors as I can.

When the market sells off, the same high conviction blue-chip bargains that I’ve been buying steadily in small amounts, become even better bargains.

How I Cashed In When The Market Freaked Out Over The Corona Super Strain

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About author

Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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