Buy This Five-Year Trend
How long do you think it should take to double your money from a stock you've bought? A couple months? A year?
I ask because, as you know, I am the editor of an investment newsletter, The Wealth Advisory. I've been doing this for 20 years. The track record is very good — 45% average on each and every stock in the portfolio. And with an introductory offer that works out to literally pennies a day, you'd think it would be an easy sell...
I suspect it has to do with the type of stocks my partner Jason Williams and I recommend. We avoid companies that have no revenues, no earnings, and just a good story to tell as to why they will be the next big thing.
About four years ago, I told subscribers that tech stocks were sitting in a sweet spot and we were gonna buy a bunch of them. We've done great with Twitter (+148%), CoreSite (+260%), Twilio (+78%), Cisco (+45%), and Palo Alto Networks (+49%).
You probably recognize most of these names. And I actually think that's part of my letter's problem...
Jason and I like companies that have a strong foothold in whatever market they are in and a clear and reliable path to growing revenues, earnings, and share price. We like dividends, and we like relative safety. But if I stood before a roomful of investors at a conference and told them they could make 45% in a year from Cisco, they'd look at me like I had three heads.
My experience has been that people like to say they are long-term investors. But what they really want is the unknown and unproven stocks — the tech company that's waiting on a patent decision or the gold miner that's just discovered a massive new vein — that could double their money in a few weeks.
So, how often does that patent decision come through or that gold vein pay off? Not very.
Now, I don't have any stats to back me up on this. But I've seen a lot in my 20 years. I've heard every "to the moon" pitch you can imagine. And I've taken my share of, um, "speculative" positions in my early years.
Some paid off. Most didn't. Ironically, this is what gets investors hooked. Psychology 101 will tell you this is "variable reinforcement." B.F. Skinner showed that the most powerful motivator is knowing a reward is coming but not knowing exactly when. The lab rat will just keep pressing the button...
Most of us are familiar with the gambler's fallacy — yeah, I know I just lost 47 hands of Black Jack in a row, but my luck's about to turn!
Me, I just got tired of losing money.
I've followed the stock market pretty much every day for 20 years. That's like 5,040 days. Or 32,760 hours. You start to get a feel for what kind of news will drive certain stocks higher and what kind of news is basically BS. You get to where you can tell when a market sell-off is going to get significantly worse and when it's time to step in and buy the dip. You get to where you can quickly discern a winner like Twitter from a dog like Snapchat.
Best of all, the experience of watching a couple decades' worth of trends play out will give you some insight as to which trends are just hollow promises and which ones have real potential to send a group of stocks up significantly. (Hint: It's usually pretty simple trends that are the most powerful. Like an elevator pitch, if it takes too long to explain, it's probably not going to resonate.)
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The Next Five-Year Trend
So now what if I told you that one year from now, a brand new consumer product will be raking in $50 billion in annual revenue? And if you act now, you can own a stock or two in this sector before 95% of that $50 billion is hitting the bottom line every year?
I hope so. Because $2.5 billion to $50 billion in revenue in a year (or maybe two) is insanely good. But again, I know most of you probably don't want to wait that long to make some loot. And that's fine. But for those of you who don't mind a 12-month wait to double your money or better, I don't see a more solid, unavoidable long-term trend than the legalization of cannabis.
Marijuana or cannabis will be legal in the U.S. within the next year. (I mean, do we really think the corporations that control Congress aren't lobbying for this?) Most analysts agree that cannabis product sales will hit $50 billion pretty quickly. And virtually none of that revenue is flowing into corporate bank accounts right now.
It doesn't get much simpler than that. And with just a little foresight and patience, the profits will come just as easily...
Canada just voted to become the second country to completely legalize cannabis behind Uruguay. The actual date for when cannabis will no longer appear in Canada's Criminal Code is October 17, 2018. That's less than four months from now. The world is watching, but the smart money is buying now.
My boss here at Angel is a fairly conservative investor. But he bought in after I gave him my elevator pitch for my favorite pot stock (it's not the first time he's made a lot of money on one of my stocks).
Brian made $17,000 in six weeks from this one. Now it's your turn. You can check out Brian's story right here.
Until next time,
A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.
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