The best thing about strategies is the ability to modify them to suit specific stocks, sectors or ETFs. While many investors like to chase highly speculative stocks or juniors as they aim for high returns, I have found I can get very good annual returns against what I would consider more protective type stocks through modifying some of the strategies I use.
Take for example, Fortis Stock. This stock is a typical utility type stock. It almost always trades in a very tight range. Over the past three years the ranges are readily identifiable. Yet many investors fail to understand the simplicity and high level of protection these types of stocks provide as well as exceptional returns. Imagine each year gaining 20% returns through learning to apply simple strategies on a stock that has a limited chance of damaging a portfolio.
Junior and Speculative Stocks
Every day I receive emails and assist investors in trying to recover huge losses from junior and speculative stocks. These types of stocks can destroy portfolios and worse, wipe out years of gains and savings. There are so many stocks in this arena it is impossible to name them all. The majority of stocks fall into this category. Today an investor has contacted me about his position in Century Aluminum where he is down a little over 50% in 4 months and his losses mounted as he tried to average down through the collapse of the stock.
Another example from my morning conversations with another investor is Genworth Financial where another investors is down 61% from his purchase price and has 20% of his capital tied to the trade as each pullback seemed like a good chance to pick up more shares which so far has just added to the losses.
Stocks can create wealth and wipe it out as well. The lure of quick returns and “double and triple baggers” draws investors in every single day. There would be a lot of very wealthy people in the world if this type of investing worked. It rarely does.
Strategies And Big Cap Stocks
For my trades I stay with my strategies and carefully pick through a small number of stocks. Fortis Stock is one of those stocks that meets my criteria. Yet from volumes along you can tell that it is not held by a lot of retail investors primarily as they see it for only a dividend investment. But a big cap stock like Fortis is the type of stock I like. Imagine when this type of stock goes on sale in a bear market! In 2008 I bought shares for $21.00. In 2009 I paid $22.75 and in 2010’s flash crash I picked up shares for $23.65. These are the types of stocks I know I can invest in and sleep at nights unconcerned about what the market will do next. These are also the types of stocks I can fearlessly buy in a bear market or when the world looks like it is about to end.
The rest of this strategy article is for FullyInformed Canada Members. This strategy article is 2500 words in length and will require 9 pages if printed. This strategy article focuses on the methods I am using through a modification to the Home On The Range Strategy in Fortis Stock.
Modified Home On The Range Strategy With Fortis Stock
FullyInformed Canada Members can login directly through this link to read this strategy article or they can sign in to the full members site here. Investors can join FullyInformed’s Canada section or read about the benefits of being a member through this link.