One Simple Strategy to Book Massive Gains from the Dip in Tech Stocks

Tech stocks

The "Tech Wreck" of early 2018 was much tamer than the crash of 1987, but it's presenting us with many of the same profit opportunities we had back then.

Back in 1987, the investing world seemed to come to an end when the Dow Jones dropped 23% in one day. This year's pullback was much less dramatic, but we did see the monster, two-year rally in tech stocks slide to a halt. The Nasdaq dipped 10% from its March high through April 2.

Both of these sell-offs - a crash and a mere correction - created great opportunities for investors...

But there is one major difference that makes today's situation extremely lucrative.

In 1987, interest rates were sky high, and the decline exposed a lot of shady practices on Wall Street. The ill-fated portfolio insurance technique comes to mind. Here in 2018, we have a totally different and more solid economy.

Interest rates are still low, and even after the U.S. Federal Reserve hikes its short-term rate up to four times this year, rates will still be a fraction of what they were in 1987. More importantly, tech companies are still innovating and have solid earnings.

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The FANGs fell harder than the broad market but still have strong fundamentals. In fact, Money Morning Defense and Tech Specialist Michael Robinson thinks these tech stocks are priced to move right now.

In other words, you can pick up some of the best tech stocks to buy for a steep discount from where they were just a few weeks ago.

"Make no mistake," Robinson said, "each member of the FAANG-Plus group is a great company. We're talking Facebook Inc. (Nasdaq: FB), Amazon.com Inc. (Nasdaq: AMZN), Netflix Inc. (Nasdaq: NFLX), and Alphabet Inc. (Nasdaq: GOOGL) - plus Apple Inc. (Nasdaq: AAPL)."

These companies are behind tech innovations like advanced chips, online streaming, social networking, cloud computing, e-commerce and mobile payments, online search, and productivity software - not to mention artificial intelligence, Big Data, virtual reality, and streaming music.

This is exactly what analysts are talking about when they say technology is the lynchpin for the economy.

As Robinson has continually told readers, "The road to wealth is paved with tech."

However, there is still some short-term risk with certain tech stocks in 2018. Congress grilling Facebook and the president's Twitter storm about Amazon immediately come to mind.

That's why Robinson uses the following strategy to protect himself from volatility while still locking in market-beating gains...

How to Book Massive Profits from Tech Stocks and Limit Risk in 2018

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Robinson developed a strategy called the "Cowboy Split," which is tailor-made for today's market. Here's how it works, in his words:

"If you're doing a traditional Cowboy Split, you buy one-half of your usual investment "stake" - if you usually buy $1,000 worth of a stock, you buy $500 worth - at market. Then, you put in a 'lowball limit order' to pick up the second half stake if the stock dips.

"To help you better understand this defensive but profitable move, let's walk through two examples.

"Let's say you have your eyes on XYZ Tech Corp. The company is in a hot growth sector, has great financials, and has a solid chart - and it's selling at $25 a share.

"Let's further assume you want to own XYZ for the long haul. You can use the Cowboy Split to buy on the dips - and increase your overall stock profits.

You start by investing half of your standard stock purchase - like I said, invest $500 if you'd usually invest $1,000 - at market ($25 a share). As soon the market order fills, you then enter what's called a 'lowball limit order.'

"You tell your broker that you want to buy a second tranche of XYZ at a much lower price. A 20% discount is a great rule of thumb for filling the second half of your Cowboy Split.

"You then enter a 'limit order' for the second round of XYZ at a price of $20 or lower. If the stock falls to that price, your order automatically fills, and you now have an average purchase price of $22.50.

"Once XYZ resumes its climb, you have baked in extra profits. For instance, when XYZ hits $30 a share, your cumulative gains are now 33.3%. ($30 minus $22.50, divided by $22.50, times 100 equals 33.3%.)

"Had you simply bought the stock at $25 and held, your returns would have been just 20%. ($30 minus $25, divided by $25, times 100 equals 20%.)

"So the Cowboy Split increased your profits by more than 50%."

There is a caveat. If the stock never falls to the limit price, your lowball order will not fill. You will end up with half the shares you wanted but you got free insurance against a larger decline in the stock's price. You can always add to your position when the stock starts rising again.

Remember, if and when the stock starts to rise, you will already be in it. You may have less, but you will be making money with lower overall risk.

Robinson also offers a variation on the Cowboy Split. Instead of reserving half your investing dollars for a 20% decline, you reserve one-third for a 10% decline and another third for the 20% decline.

Both methods let you buy stock on the cheap instead of guessing when the perfect time to invest might be. And both assure you of being in the stock when the bull returns.

And that's not the only profit opportunity we're bringing you today...

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Cryptocurrency legend Michael Robinson just revealed the little-known details regarding the future of Bitcoin... and why at any moment, it could be poised for a record-breaking rebound far beyond anything we've witnessed already.

Michael made a prediction about Bitcoin way back in 2013 - and folks who followed his advice stood to become 253 times richer. I'd venture to say not one in 10,000 people is aware of the massive profit potential unfolding right now.

Before the mainstream public gets any wiser, you need to see this now.

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