Stock Forex

Capitalizing Profits

I wrote my first book almost two decades ago. I have had a wonderful audience—a very supportive following. Those of you who know how I write and how I think will definitely be unsettled by the following chapter!

There is a purpose, a rhyme and reason to my madness. Indeed, it is in my attempt to explain my “stock market madness” that the following is written. Why? People come up and ask me how I can make such fantastic returns. How do I consistently get 10,000% plus annualized returns?

So come along—I hope you’ll come to understand my rationale and my results. It will take a while, but the first part of this chapter is necessary to understand the last part, the crucial part. It may be slow at first, and you’ll have to wade through my “Wade-isms,” as I have never before tried to encapsulate my thinking process and results. This is new territory. Hopefully not the final frontier.

Holy Macro

I hope to give a “macro-view” and use micro examples to justify my reasoning. There definitely is a “herd” mentality and I am not the first one to try to understand it and to figure out how to profit from it, or how to not lose by following it. More importantly, trying to understand this type of stock market mentality is the perfect way to try to figure out just when the “herd” is about to turn. This turning point is the point when a lot of profits can be made. But I’m ahead of myself. That is the conclusion to this chapter. The profit-making point of reversal or correction of a stock is crucial. I bring it up at the beginning so you know where this chapter is heading. I will not be untrue to the theme that has worked well for me, both in my personal investing and my seminars: use a little cash to purchase an asset, get in, then get out with a nice chunk of cash (profits) or smaller cash flows (payments). In short, I want income (cash flow) from dividends, capital gains, option premiums, or whatever income that allows us to live, to pay the bills, and grow rich.

Another theme of my books and seminars is “to whom are we listening?” If you want to make $100,000 a year, why are you listening to anyone making under $100,000 a year? It is to this point that we’ll launch into this area of discussion.

There is a widespread belief that the market is always right. I disagree. There are too many variables. The market is not always right. When it comes to a particular stock, there is definitely too much sentiment to come to any conclusion that a stock’s price is “right.” (I’ll give in on this a little, if you’re determining a stock price based on a “best guess” midpoint price between a high and a low, or a recent support level and resistance level.)

I’ll get back to individual stocks later, but for now let’s deal with the stock market in general.