You're going to be tempted to dismiss what I'm about to
You'll want to say, "That's a strategy for day traders... too
risky for my blood."
But it's not. It's one of the most reliable ways to make an
extra 10% or more on your investments... or possibly even double
your money in a year.
Let me explain...
Every stock has its share price fall from time to time.
Sometimes the fall is justified - think
General Motors (NYSE:
circa 2009. But other times a stock will fall as much as 10% in a
day based on faulty reasoning.
If you can tell when an overnight drop is a buying signal, then
you'll be able to pocket some quick gains. Surprisingly, it's not
difficult. There are certain conditions that almost always result
in a stock bounce.
Here are a few "buy" signals that I've used recently...
A short-sighted selloff
Yahoo! Inc. (Nasdaq:
Stock of the Month
portfolio last August.Shares of the media technology company
dropped just a day after my first purchase. I was initially
concerned until I read through Yahoo's regulatory filing and
It seems that the newCEO , Marissa Mayer, was reviewing the
company's strategy, especially relating to the proceeds from the
planned sale of Yahoo's stake in the Chinese company
Investors thought they might receive a big fatcash dividend from
the sale. So they were disappointed to learn that the CEO was
considering putting that cash back into Yahoo and/or acquiring
other companies that would lead to shareholder growth.
Quite frankly, I liked the news. I was happy Mayer was thinking
about growing the company's top line in the long term. So I doubled
down on my investment.
Yahoo ended up giving the lion's share of the proceeds to
shareholders, but held back a fair amount for reinvestment in the
business. Once the dust settled, the share price bounced, giving me
a quick 6% bump.
The lesson? If a stock falls from a one-time event unrelated
toearnings and growth, then that could be a buying signal.
While I still hold Yahoo! in my "real money" portfolio, I have
another example of a company that I actually cashed out of after a
quick gain from a one-time event.
A natural disaster
Tiffany & Co. (NYSE:
in my portfolio when a massive earthquake rocked Japan in March
2011. At the time, Tiffany derived 18% of its sales from the island
nation. It was hard to imagine the Japanese people prioritizing
luxury purchases in the months following the quake. As a result,
the stock dropped 12% in just a few days.
But investors failed to realize Tiffany had been relying less on
the Japanesemarket . The vast majority of its expansion in Asia
during the prior few years had been in faster-growing markets like
China and Singapore. In essence, the market was ignoring the
remaining 82% of its solid growth.
I sent out an e-mail alert to my 10,938
Stock of the Month
subscribers telling them that I would be buying 30 more shares of
Tiffany. Less than three months later, I closed half my position
for a 17% gain.
The lesson? If a rare one-time event, like an earthquake,
directly affects a company's sales, then you should consider
selling. But if a stock is only temporarily affected, or is just
being sold off in a panic, then this can be a great buying
While these gains may seem modest, they can rapidly increase
your returns. For example, if you invested $10,000 in a company
that grew 10% in a year, then your gain would be $1,000. But if you
added a 10% boost from buying after one of the "buy" signals I
mentioned here, then your growth would be 20%, or $2,000 -- twice
as much money.
And even if it doesn't double your money, an immediate gain is
great for peace of mind. It's easier to sleep at night knowing
you've got a cushion protecting you from short-term
Risks to Consider:
Of course, like all investing, there are no guarantees with
this strategy. Occasionally a stock will stay down, even though all
signs point toward it bouncing back.
Action to Take -->
But the point remains that just because a stock has a short-term
selloff, there's no reason to panic. As long as the fundamentals
are sound and the company still has a positive growth outlook,
one-time events could prove to be some of the market's best buying
I've discovered a way for investors like you to safely tap into a
windfall of profits. I'll show you how a $5,000 investment in one
of these companies long before most investors knew about it became
a staggering $1,187,300... in just three years.
Click here to find out
about these investment opportunities before it's too late.]
-- Amy Calistri
Amy Calistri does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC owns
shares of YHOO in one or more if its "real money" portfolios.