A Once in a Lifetime Opportunity, again!
It's amazing how often great opportunities come along, but caution and patience are key before taking action.
In 2020 there were dozens and dozens of ‘once in a lifetime opportunities’, and gains of 1000% with a large position can indeed be life changing. Some of those stocks have since dropped 50-90%. Now, picking the ones that will be winners going forward could be life changing, but I still believe continuous base hits is better than a few home runs.
ASAN was one of the last ones to crash and I missed its run up from $60 to $145 because I was expecting it to follow the path of others that had already dropped. I finally bought a single share in December, 2021, just in case it roared up again.
I missed out buying Facebook at $18 in 2012 because I was waiting for after the lock up period to buy. It began moving up a few weeks before that date and expected drop and I didn’t buy in the low $20s, unfortunately. Thus, my mindset for getting a few shares of ASAN to hold for the long haul.
I wasn’t investing in early 2000 when Amazon was the deal of the century. It fell 95% from its high in December 1999. Are there bargains like that available now? Or are they all going to fall another 70-80%?
Even buying then at 37.94 in 2016 gave a tidy gain of 397% to the July, 2021 high of 188.65.
In January-February this year, many ‘experts’ were claiming that bio-tech was severely undervalued. XBI And IBB: You May Keep Laughing While We Keep Buying This March 2020-Like Opportunity “Over the past month, we've been particularly bullish on biotech, and this has been anything but a good month for biotech stocks. While "sitting" on "nice" losses on our biotech exposure…” Nice losses?! From the chart below, it seems pretty clear to me that there was no reason to be buying and holding from the high in December.
The date of the article, Jan. 28, you may have bought, but you would have hopefully sold for a small gain mid February versus holding for a “nice” loss. Just because something is severely undervalued doesn’t mean it’s a bargain and something you should buy and hold. Buying on March 15, NOT March 14, would have been a good bet hoping for a double bottom, but you have to sell as it falls from the high in April.
On a monthly basis, can you see when you might want to buy?
I don’t understand how people say you can’t ‘time’ the market. Buying in June at a triple bottom was a good bet and if it fell more then you MUST sell. It then roared up 53% in two short months and will likely continue higher if it truly is undervalued, but getting back to the 2021 high is only +100%, which is great, but not life changing or the opportunity of a lifetime.
Getting 53% in two short months or less, several times a year, consistently, would be life changing. In the past 2 weeks, you could have bagged 39% with UVXY or 68% with KOLD (short natural gas).
One trader I know loves trading natural gas and it has been a money printer (and burner) this year, mostly being long (BOIL). I’ve been adamant all year that the high prices were unjustified, and thus missed out on much of the opportunity. Thankfully, UVXY trades (following the rules) pretty much matched the returns in BOIL. Here’s the chart for NG and the recent potential with KOLD.
He first went short Aug. 16 and sold the next day for a 1.2% loss. On Aug. 18, he bought again, some cheaper but most at a higher price and sold the same day for a 3.4% gain. He was convinced of the short trade but was remaining cautious and respecting the price action. On Aug. 23, he bought and sold a small position for +16.3%. On Aug. 25, he started buying, some lower than his sell price but others higher with his highest buy on Sep. 1 at 12.26. From then on, there was no caution, just conviction, which resulted in being underwater on all his buys on Sep. 14, where he bought more at 11.03 and watched it fall to the low of 9.85 and didn’t buy more then. It was indeed a nonsense move, but his conviction buying wasn’t a match for his voice, muffled underwater. He then bought more on Sep. 21 at 12.32 now that he was floating and had caught his breath. I sold my small position on Thursday, while he held for Friday and sold at 16.65 for a 393k profit (about 50%).
He’s pretty much set in his ways of trading now. It works for him and it has definitely been life changing. I say he could do a lot better with a few modifications, namely patience and as another trader eloquently said, “I trade from the view of strong opinions, weakly held. If a stock isn't working, I'm not going to fight the market, I can always buy it back, but staying wrong is how one loses money and erodes discipline. I try and keep losses small and ride winners, especially in micro-caps where 30-50% declines are possible.” His focus on one big trade is, I think, an excellent strategy, and the ‘rules’ for trading UVXY have been excellent for timing. Here’s the potential from the past month.
All of the shown trades were cautious buys and sells according to the strategy I laid out in December, 2021. Yes, during volatile periods there are a lot more trades to be made (compared to KOLD), but it’s also a lot ‘safer’, and you always sell when it tops out, and never hold underwater. What I didn’t predict in December was the incredible power of compounding gains from multiple smaller trades. Another 150% gain in just over a month of trading would indeed be life changing if carried out over several years.
Last week the markets pulled back more than I expected and the fake moves down up and finally down on Wednesday after the FOMC announcement may have left you with your head spinning. It’s maddening that even expecting the fakes, you can still get faked out.
Thursday it held flat with attempted rallies and was finally looking okay, made a push up and dropped hard in the final 10 minutes. Friday it slid lower all day, then ‘someone’ hit the switch at 3pm and up it went. How it’s possible to coordinate such moves across all markets and most stocks is pretty hard to comprehend. I guess it’s the high frequency trading computers and their algos, but it’s still pretty hard to believe. Yet, it’s a reality of the markets so simply learn how to benefit from it.
And UVXY is the best way I know of to benefit from it. The strategy / rules have been working effectively all year. The execution, for myself and probably for you, still needs some practice. I was trading HUV for the first 5 months and it’s terrible because stops are nearly always jumped over. Since switching to UVXY I’ve done much better but I’m still trading too much. Year to date, following the strategy, UVXY is up a potential 12,256% which is unbelievable until you sit down and do the math.
So, it’s great to pick major winners like AMZN or TSLA, and it will be fun to pick one going forward, but my ‘life changing opportunity’ bet is going to be on UVXY.