570% in 10 Years... Is This the Greatest Investment Strategy Ever?

570% in 10 Years... Is This the Greatest Investment Strategy Ever? Bob Bogda, StreetAuthority Managing Editor June 8, 2013    Print | PDF | Ensure Delivery In last Saturday's issue of Trade of the Week, I introduced you to Michael J. Carr's latest research. I told you a little about his history (he retired as a Lieutenant Colonel in the Air Force before managing $200 million) and how he was working on a project that used a few simple trading techniques to help investors see bigger returns in the stock market. But at the time, his research wasn't finalized. I couldn't jump the gun and go into too much detail. Now Mike is finished... and today he is talking for the first time about what he's found. Also In Today's Issue One of the Most Important Works Our Firm Has Ever Produced It's a groundbreaking study that our trading expert Michael J. Carr just finished. Mike has uncovered a new way of investing that, according to his tests, would have turned $100,000 into $670,613 during the past decade. Click here to learn how. World's First Effortless Investment? Over 10,000 investors have discovered what could be the simplest investment strategy ever. They're finding winning stocks 85% of the time, but are able to spend more time on the golf course than "managing" their portfolio. Find out their simple secret here, along with several ticker symbols. By using the same stocks recommended by the StreetAuthority experts, Mike generated a 570% return in his decade-long test. And he did it without using complicated tools like derivatives, options or futures. It's a system that anyone can follow. There was Mike's win in Costco (NASDAQ: COST), where his system scored 34%... PVR Partners (NYSE: PVR), which gained 77.9%... and Taseko Mines (NYSE: TGB) and its 241.3% gain in a little over seven months. Mike's system flagged all of these winners -- each gleaned from a StreetAuthority newsletter portfolio -- during his decade-long back-test. In total, Mike calculated his system turned $100,000 into $670,613 during the past decade. And in just the past year, his system would have earned 50.8% for investors, compared with 16.9% for the S&P 500. I know that people want to know more, so I've asked Mike to share the details about his research to give Profitable Trading readers the scoop. Bob: Can you explain what exactly you discovered? Michael: I've made a career out of trading. But I know many people think "trading" is a dirty word. So to prove that a few simple trading techniques can help people make significantly more in the stock market, I decided to apply a system I created to the current holdings in StreetAuthority's newsletter portfolios. By using the same stocks held by the StreetAuthority experts, the back-tested results of my system showed an annual return of 21.5% during the past decade, compared with about 7% in the S&P 500. Over the entire decade-long test period, the total return for my system was 570%. Bob: How did you do it? Michael: I applied a few simple trading techniques that anyone can follow. First, I start only with stocks currently held within StreetAuthority's various portfolios. This ensures I'm focusing on the very best, most fundamentally sound investments that the experts have found. From there, I run every holding through a test of relative strength. Relative strength simply compares the past six months' performance of a stock with the entire market. If a stock is rising faster than 70% of the market, then it passes this part of my test. If you want to make money the fastest way possible, you want to buy stocks that are already on their way up. It's like the difference between waiting at a bus stop and hopping on a moving train. If a stock passes this test, then I look at the strength of its cash flow per share. Cash flow measures the amount of money coming into a business. It's the lifeblood of any company. This is the money a business uses to buy new factories, pours into research and development, or delivers back to its investors via dividends and share buybacks. I focus on a stock only if it's seeing cash flow per share rising faster than 70% of all available stocks. After accounting for relative strength and cash flow growth, my system will only rank a maximum of 10 stocks as "buys." Only 10 stocks from the dozens that the staff of experts recommends -- and the thousands traded on the market. That's the cream of the crop. Bob: Doesn't trading require a lot of buying and selling, not to mention racking up commissions? Michael: Absolutely not. Any time you mention trading, most people envision day trading, where individuals move in and out of stocks quickly. My back-test of this strategy registered about two trades per month during the past decade. The average holding period for a stock was 10 months. Bob: Where can people learn more? Michael: StreetAuthority has created a new presentation that outlines everything you need to know. It has the complete details of my research, more on how the system works and more about the specific winning stocks this system has found. It's taken everyone several weeks to finalize this test and present the findings. This is the first time it's being released to the public. You can click here to see this presentation now. [Note: Mike has also ranked the top 25 stocks held by StreetAuthority experts using his trading system. If you're looking for solid trading ideas likely to outperform the market, any stock on this list would make for the perfect starting point. To learn more about these top 25 stocks and Mike's trading system, click here.] Editor's note: Thank you for reading today's issue. As always, you can send feedback to Editorial@ProfitableTrading.com. Dr. Melvin Pasternak's Trades & Updates Company (symbol) Trade Type Buy/Sell Date Buy/Sell Price Stop-Loss Current Price Total Return SPDR High Yield Bond ETF (NYSE: JNK) Long 01/30/12 $39.94 $34.98 $40.24 0.7% Procter & Gamble (NYSE: PG) Long 03/04/13 $76.25 $70.24 $77.75 2.0% H&R Block (NYSE: HRB) Long 03/18/13 $27.33 $28.89 Closed 9.2% Hershey Company (NYSE: HSY) Long 04/01/13 $87.35 $78.88 $89.48 2.4% Coca-Cola (NYSE: KO) Long 04/08/13 $40.06 $37.49 $41.41 3.4% View all closed trades here. Stock prices in this issue are as of the close of trading on June 8. SPDR Barclays Capital High Yield Bond ETF (NYSE: JNK) slid early in the week, but regained ground, closing the week about where it opened. The ETF is currently testing support at the lower Bollinger Band, which intersects slightly below the 150-day moving average. Daily RSI appears to be recovering from deeply oversold territory. I purchased the fund at $39.94. I'm currently about breakeven on the trade. My stop-loss of $34.98 and target of $48.01 remain. Procter & Gamble (NYSE: PG) held flat through the week. Shares are currently rebounding from support at the lower Bollinger Band. Daily RSI is slightly below the key 50 juncture, but holding. The company is scheduled to announce its next-quarter results on Aug. 1. I purchased the stock at $76.25. So far, I'm up about 2% on the trade. My stop-loss of $70.24 and target of $89.83 hold. H&R Block (NYSE: HRB) hit my revised stop-loss of $28.89. Over the time I held the stock, I made over 9%. The trade is now closed. Hershey Company (NYSE: HSY) held about flat over the week. Shares are trading between support at the lower Bollinger Band and resistance at the rising 20-day moving average. Daily RSI is right at the key 50 juncture, but holding flat. Daily stochastics appears to have bottomed and is on the verge of moving higher. The chocolate company is scheduled to report results on July 22. I bought the stock at $87.35. So far, I'm up over 2% on the trade. My stop-loss of $78.88 and target of $102.66 remain. Coca-Cola (NYSE: KO) rose during the week. Shares are currently trading just above support at the lower Bollinger Band. Daily RSI is slightly below the key 50 juncture, but holding steady. The beverage company is scheduled to report earnings results on July 16. I purchased shares at $40.06, and I'm currently up over 3% on the trade. My target of $44.30 and stop-loss of $37.49 hold. To read my most recent article, EU Approval of Blockbuster Drug Could Mean Big Returns From This Pharma Giant, visit ProfitableTrading.com. -- Dr. Melvin Pasternak Co-Editor, Trade of the Week This Blue Chip Could Deliver 30% Gains by Year-End Under $6 Stock Could Score Traders Double-Digit Profits in 3 Months Bearish Chart Pattern Says This Stock is Headed for a Short-Term Slump         Disclosure: None. You are receiving this newsletter because you visited us at ProfitableTrading.com and registered to receive our free trading service -- Trade of the Week. If you feel you have received this issue in error, please contact us by visiting our web site. We sincerely hope that you benefit from your subscription to this free newsletter, and we're willing to do whatever it takes to keep you as a satisfied customer. You may contact our customer service department by visiting this link or writing us at ProfitableTrading.com, LLC, 839-K Quince Orchard Blvd., Gaithersburg, MD 20878. 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