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2019 was one for the books - we're closing on new market highs, after all.
We're ending the year during the longest bull run in history. But people aren't exactly celebrating. You see, the second the door closes on 2019, everyone's eyes are going to be focused on one thing: 2020.
There are predictions floating around everywhere you look about the upcoming year. The financial news networks are running headline after headline, contradicting themselves by saying things like "Are Investors Underestimating the Chances of 2020 Recession?" followed by "U.S. Economy Shakes Free of Recession Fears in Striking Turnaround."
The bottom line is this: No one really knows what 2020 has in store.
But what we do know is how to profit from the year's market movement no matter what happens.
So today, I'm going to show you a time-tested, reliable pattern that'll have you ringing the profit bell all year long...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Use the Dow's "Puppies" to Lock Down a Year Full of Profits
The "Dogs of the Dow" (DOTD) is an investment strategy that has been around since 1972. That's 47 years of proven research, with back-tested results from the late 50s.
Really, I couldn't ask for a stronger pattern than that.
It's simple, too. All you have to do is find the 10 stocks in the Dow Jones Industrial Average with the highest dividend yield on the last trading day of the year.
Then, you invest equal dollar amounts into each of them and hold them for the entire year.
In the years the DOTD outperformed the Dow itself, it did so by 3% - which, with dividend payments, averaged a return of 14.3% for those who used the strategy.
Not a bad gain. But there's another way to play this strategy that could return a whole lot more than that.
In fact, last year, you could have taken home a whopping 483% using this offshoot of the DOTD...
It's called the "Flying Five." Basically, you just take the five cheapest stocks from the 10 Dogs - often referred to as the "puppies" - and play them the same way you would the DOTD.
On the last trading day of the year, invest equal amounts into each of these five stocks - and watch the profits roll in.
But you don't even have to do the work to find each of these stocks and how to play them. Instead, I can do the work for you.
If you want to double, triple, even quadruple your money, then you won't want to buy the Flying Five's stocks. You'll want to buy options.
Not just any option, though. You know I'm a true-blue fan of short-term options that can drop a profit in your pocket in 30 days or less. But when you're playing the Flying Five, you're looking to profit in the long term.
So, you may want to consider buying long-term equity anticipation securities (LEAPS) instead.
LEAPS are options with expiration dates over a year away. So, instead of investing equal dollar amounts into the Flying Five and selling your shares on the last day of the year, you could buy one-year-out call options of equal dollar amounts on the stocks.
I don't mean you should purchase the same number of contracts. Say you allocate $1,000 to each of the five puppies' LEAPS - you may end up with five contracts of one and eight or 10 of another.
For example, last year, one of the Flying Five was beverage giant Coca-Cola Co. (NYSE: KO). On Jan. 2, 2019, my readers could have bought KO LEAPS with a Jan. 17, 2020 expiration date. They could have spent just $3.35 - or $335 for control over 100 shares.
I recommended that they hold the call option for almost the entirety of the year, just as the strategy calls for. Then, on Dec. 19, they could have sold the call for $7.30 - closing out the year with an impressive 117.91% gain.
Together, this Flying Five strategy could have handed my readers a 483% gain in 2019.
And this year could be even better. We're looking at a potential return of 1,138% by the time the year is up.
To learn how you can play this year's Flying Five stocks, click here now.
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.