As the Market Hits Another Top, Here's What Drives Me Nuts

As dry as they may be, let's go over some numbers.

First, on Oct. 23, the S&P 500 broke the record for the number of consecutive days without a 3% decline. The previous record was set back in 1996, when the S&P 500 went 241 days without a meaningful decline.

Second, since Jan. 1, the S&P 500 has closed at a record high 66 times - the most since the mid-1990s.

Third, so far this year, the S&P 500 has dropped by 1% or more in a single day only four times. That's its longest stretch we've seen since 1964.

Sounds great - if a bit boring (volatility is also at record lows).

However, there is a huge problem with this generational bull market. It makes me nuts that many investors - too many of you folks reading this - are sitting on the sidelines.

It's bonkers. I don't get it.

While it sounds counterintuitive, many investors stay out of record markets because they fear the good times could come to an end any day now.

I know this describes many of you folks because you write and tell me that you're afraid of this "peaky" market.

Fear no longer.

Here's the thing. If you've got the right "toolkit," you can stay in any sort of market - a high one poised for a dip, a low one about to soar, or anything in between - and make money.

A lot of money.

Here's what you need for that toolkit...

The Case for Stocks - Even at the Top

Tech investors who stay in the market will be rewarded for their courage.

According to Dow Theory Forecasts, "the biggest risk of investing is not being in the market when it goes down, but being OUT of the market when it goes up... Every time you pull money out of the market, you run the risk of missing those important rallies that create seven-figure portfolios."

In other words, the best time to get out of the market is never.

Now, before we fill up our toolkit, let me clear up one major item.

I don't see any signs of an impending correction. But if we get one, it would present us with lots of great buying opportunities.

And the best way to seize the advantage with such a turn of events is to make sure you are in the market along the way.

Our job here at Strategic Tech Investor is to make money no matter what happens. To do so, you'll want to put these Five Market Top Tools in your kit. They're designed to make money from this great bull market - and bear markets as well.

Take a look...

Market Top Tool No. 1: Buy Test Shares

This is actually two powerful Market Top Tools in one simple move. When a market is at a record and there's a risk of a sell-off, rather than make your normal entry in a position, you start with just a few "test shares."

By doing so, you greatly reduce your risk and determine if the timing is right for this play. What we want to do is make sure we're set for any sudden rally - and at the same time reduce our risk of losses.

Here's how it works. Let's say your standard market order for a stock is $2,500. Instead, you would cut that to as little as $500. That way if either the stock or the market retreats quickly, your portfolio won't suffer much damage.

But at the same time, if the stock starts to move quickly, you can always add to your position over time.

Market Top Tool No. 2: Use Stop-Losses

There are two ways to employ this essential Market Top Tool.

The first is a stop-loss that protects against losses getting too deep on a new entry. I suggest a stop-loss of no more than 20%. This is a classic tool designed to avoid suffering any catastrophic setbacks. I always set my stops on what's known as a "good until canceled" basis, which is industry parlance for having one in place for 60 days.

The second method is a "trailing stop" used to protect gains. This is one that moves up as the price of the stock advances. Use the same 20% figure in this manner.

Let's say you bought a stock at $15 that's gone up by 66% to $25. A 20% trailing stop gives you a price of $20. That way you get out with profits of 33% - no matter what happens.

Market Top Tool No. 3: The Cowboy Split

I'm shocked more professional investors don't know about this powerful moneymaking tool. But it's a Market Top Tool my paid-up Nova-X Report and Radical Technology Profits readers have been using to rack up triple-digit gains like clockwork.

Simply stated, the cowboy split is a staggered entry system. You take a position in a stock at market - and then enter a "lowball limit" order to buy more if a discount comes your way.

In general, I recommend employing a 15% to 20% discount from your entry price as a second buy point. Here's how it works...

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You acquire 50% of your intended stake of XYZ Tech Corp. at price of $50. In this case, should the market trigger your "lowball limit" order, you would automatically buy a second 50% stake at $40 a share, for an average price of $45.

Now, assume XYZ rallies all the way to $60. You would then have 16.6% appreciation on your original shares. But it's that second stake that really juices your profits.

See, that second half's gains are double those of your first buy. This way, you end up with overall gains of 25%, or roughly 50% more than had you just bought your full stake at $50.

Market Top Tool No. 4: Play "Moneyball"

These days the market is filled with momentum traders. These are aggressive types who pile into stocks that are on the move.

While their moves can add to your short-term gains, they greatly increase the odds that you'll see a big mover reverse quickly on profit-taking.

That's why the Market Top Tool that I call playing "moneyball" is so effective. I named it after the book and movie "Moneyball," about how my hometown baseball team, the Oakland A's, won 20 straight games in 2002 on a shoestring budget.

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The A's weren't looking for home runs. Their idea was to get as many runners on base as possible. In other words, they looked for singles and doubles.

Rather than looking to double your money, take some gains off the table when a stock advances, say 25%, which is still a market-crushing return.

Remember: The faster a stock moves, the more you'll want to protect some of those "windfall gains" before those momentum traders reverse it on profit-taking.

And no matter what, always take a "free trade" - sell half - when you book 100% gains. That way you get your original capital back... and are playing on the house's money from then on.

Market Top Tool No. 5: The Autopilot System

Whenever possible, set yourself up so that you exit a position with specific gains no matter what happens.

That's where a Market Top Tool that I call the "autopilot system" comes in handy. It's a unique way of protecting profits with a combination of taking gains and using trailing stops.

It works like this...

Let's say you sold half of XYZ Tech when it was up 30%. Now you can afford to see if the stock sill has more upside while at the same time protecting your profits against any reversal.

In this case, you could set your stop at your original entry point and walk away with combined gains of 15%. Or you can set the trailing stop above your entry price to lock in more money.

The beauty of the system is that you set up your minimum profit figure in advance. After that, there's no need to worry about what happens, because the autopilot system is protecting your portfolio.

You can see that by using our Market Top Tools, you can keep on investing in winning tech stocks - even at these market peaks - and know that we're prepared for anything the world throws at us.

This is one of our my main missions at Strategic Tech Investor - showing you the investing rules and tools that you need to lower your risk, protect your portfolio, and make a lot of money.

If you employ these Market Top Tools, you'll get through good times and bad not just with your portfolio intact, but with extra money in the bank as well.

And you won't drive yourself nuts on this road to wealth... paved by tech.

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The post As the Market Hits Another Top, Here's What Drives Me Nuts appeared first on Strategic Tech Investor.

About the Author

Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...

  • He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
  • He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
  • As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.

This all means the entire world is constantly seeking Michael's insight.

In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.

Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.

And even with decades of experience, Michael believes there has never been a moment in time quite like this.

Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.

To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.

His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.

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