“How did you make 995% on that trade?”
We have a new, young employee in the office. He’s just learning the ropes…
When he saw that subscribers had made 995% on a stock recommendation, he wanted to know how we did it…
I assume he asked because he’s young, and he’d love to get a few gains like that under his belt.[ad#Google Adsense 336×280-IA]I explained the deal to him and what he needed to know…
“The most important thing in making a 995% gain is allowing it to happen,” I explained to him.
My recommendation of Seabridge Gold (NYSE: SA) soared well over 1,000% from when I first recommended it.
We ended up closing out that trade with a gain of 995% in just over four years.
The most important thing in that trade was NOT selling… but allowing it to “fully cook.”
You see, you only get a handful of opportunities in your lifetime with the potential for hundreds-of-percent returns.
In my career, I’ve learned your REAL outperformance in investing comes from getting those few big winners… If you take those big winners away, you are doomed to underperform the stock market.
The thing is, if you don’t give those opportunities a chance to fully cook, you’ll never make those big gains.
The problem most people have is this: As soon as they see a profit, they want to sell… Most people think “I’m up 20% – I’ve got to take that profit.”
The truth is simple here… It’s basic math: You will never get a 1,000% gain in a stock by taking a profit once you’re up by only 20% (or 30%, or 40%, etc.)
On the flip side, most people make the problem even worse, by NOT selling once they’re down on a stock. They say: “I’m down 20%… I can’t sell now. It’ll come back.” But then where do you end up?
If you make both of these mistakes – as most people do – you’ll definitely underperform the markets. You’ll soon realize you’ve sold everything that’s up 20%, and you’ve held on to everything that’s down 20%. You now have a portfolio of losers.
To outperform the markets, you must do this one simple thing: You must give your winners a chance to win big.
In the case of Seabridge Gold, the story just kept getting better as we owned it… The price of gold kept going up. And Seabridge kept finding more gold. So we didn’t need to sell. We didn’t sell… And that was the right call. In the time we owned it, Seabridge soared from under $3 a share to over $30 a share.
The most important thing that we did was to NOT sell early on the way up… We let it keep going. We didn’t sell it just because it had gone up by 20% or 30%. We let it fully cook.
If you want to have a 995% winner – or even a 50% winner – you can’t sell too early just because you’re up a bit.
This is what separates the pros from the amateurs. It’s what separates the successful investors from the ones that will never outperform. Which do you want to be?
What do you do right now? If you sell at the first sign of a profit, then I hate to break it to you… but you will likely never outperform the markets. Wouldn’t you prefer to be a successful investor instead?
Are you doing it right? Or is it time for some changes?
Make the change… and you’ll be on your way to success…