Just as daily routines ease the stress of life’s unpredictable nature, so too do investment routines. If uncontrolled emotion – excessive greed or paralyzing fear – is the downfall of every gone-broke investor… then the goal is to remove emotion from the process.
That’s what rules-based investors do. We rely on statistical evidence, carefully constructed routines and, most importantly, the self-control and discipline needed to STICK TO THE SCRIPT! We allow our statistical edge to work FOR us, rather than allowing our emotions to work AGAINST us.
The good news is, as Rodney highlights, much of the economy and markets is fairly predictable. After all, people make up the economy and markets… and people are creatures of habit.
Take consumer spending as one example. Here’s a chart I shared with just 50 or so beta-testers of my new service – Cycle 9 Alert – back on November 6, 2012. This was the first of 28 weekly alerts I’ve sent out to those who volunteered to test-drive the service before we make it available to you (next week!).
While I agreed to share this research with beta-testers first, I don’t think they’ll mind me sharing it with you now as they’ve already had the opportunity to pocket the 91% gain we earnrned from buying call options on the Consumer Discretionary sector (XLY).
Can you see how predictable consumers are?
This predictability is a gift for investors.
Here’s a short excerpt from the first beta issue of Cycle 9 Alert, which I sent out on November 6, 2012:
History shows that the fourth quarter is a gold mine for investors in the Consumer Discretionary sector. For the past 10 years, buying the Consumer Discretionary sector (XLY) in September, October or November, and selling three months later, gave investors the best odds of making money, generating winners 77% of the time. Just have a look at the last few years…
- In 2009, XLY triggered my Buy Alert threshold on September 23. Three months later, XLY was up 7.7%.
- In 2010, XLY hit the threshold on September 27. The sector gained a handsome 11.4% over the following three months.
- In 2011, XLY was performing only slightly above average and never triggered a Buy Alert. This steered me clear of a messy fourth quarter.
After helping me avoid a bad fourth quarter for stocks in 2011, my system triggered another buy alert in the Consumer Discretionary sector (XLY) last November. I shared this with my Cycle 9 beta-testers, recommending they purchase call options on XLY. We held the trade from November 6, 2012 through January 29, 2013.
During this time, the ETF rallied 7.5%. The call options I recommended did even better, gaining 91%.
Now that’s what I call predictability that pays!
If you’re looking for a new investment routine… a disciplined system to follow… one that will reduce the stress of the stock market’s many unknowns and allow you to make better decisions…
I sincerely hope you consider joining Cycle 9 Alert when we make it available next week.