An Early Retiree Profits In The Stock Market By A Focused Approach

John Krystopolski, a student of the stock market who's been reading IBD for several years now, retired two years ago after a 38-year career as a maintenance technician at Sealy Spring in Delano, Pa.

Several of his stock trades illustrate how having a sound investing method can have a meaningful impact on the quality of your retirement lifestyle.

He's in his early 60s now and has more time to hone his skills in the market. Krystopolski has been in the market seriously for about the past 10 years and reading IBD for the last eight.

"I've always had two or three jobs in my life. My parents owned a restaurant/bar and I was always there, filling napkin containers, grating cheese, folding pizza boxes, you name it," he said. "I even ran a bicycle repair shop when I was 12, out of my grandfather's garage."

These days, he's content with his real estate license to close one or two gas station/convenience store deals a year. He uses the commission to fund his stock investment account, which has grown nicely over the years thanks to some big winners.

IBD's Composite Rating is his go-to stock rating because it uncovers stocks with strong potential. The rating helps uncover stocks that not only are strong fundamentally but also are showing leading price performance. He also focuses on leading industry groups in the market using IBD's 197 industry group rankings.

Krystopolski is not risk-averse, preferring to own one or two stocks at a time, instead of 20 to 30 like some of his friends. "I never understood how you could invest money with that much diversification," he said. "Some go up, some go down and you eventually tread water, not making meaningful gains."

Krystopolski tried the diversified route with a financial advisor in the early going but left after six months when a mix of U.S. stock, bond and emerging market mutual fund exposure resulted in diluted performance.

During confirmed uptrends, when a positive market tide is working in his favor, Krystolpolski isn't shy about making big, focused bets. Just recently, his portfolio tilted aggressive because one of his big winners, Nvidia ( NVDA ), was still working nicely.

But Krystopolski sees his portfolio slanting toward more conservative in the not-so-distant future, favoring some high-quality, dividend-paying names with healthy charts, as he gets ready to start construction of his retirement home, helped by profits he's made in individual stocks.

"I have friends that own stocks with high dividend yields, but the great yield is offset by weak price performance. They're comforted by a strong yield, but that doesn't mean much if a stock is going down in price and lagging the market," he said.

He really pays attention to what's "new" at a company that's driving big earnings growth. Nvidia showed that in spades last spring. It was expanding from graphics chips to new markets, like autonomous driving.

A well-timed buy with Nvidia when the chip firm was breaking out of a base near 33 resulted in a huge gain over the next several months. And Krystopoliski profited even more when Nvidia soared around 30% on Nov. 11. He eventually locked in a big gain but continues to trade the stock.

Krystopolski has learned that risk-management is key when investing in fast-moving growth stocks. He's a big believer in knowing where his exit price will be after buying.

Early last year, he bought shares of ( AMZN ) when the stock was trading around 660. Soon after, though, IBD changed its outlook to "market in correction," and Krystopolski knew he had to play defense. Shares started to bleed and Krystopolski sold around 620 for a manageable 6% loss. From there, the stock lost another 23% before rebounding. "I'm not a point in my life where I can afford to let a small loss spiral out of control," he said.

Another big winner for Krystopolski was Baidu ( BIDU ). He first bought shares soon after the start of the bull market in March 2009. "I remember my nephew was telling me to buy shares of Google in the early stages of its move, but I passed. When IBD started writing a lot about a Chinese search engine with outstanding growth, I didn't want to miss out." Baidu's advance was such that the stock split 10-for-1 in May 2010.

Krystopolski knows the value of monitoring shifts in market outlook by using IBD's Big Picture column. A good portion of his big winners came during confirmed uptrends when the institutional money was coming in from the sidelines, providing the fuel for big market leaders.

Three pieces of advice Krystopolski has for investors:

  • Don't buy anything during the first hour of trading, because a stock can look very good early in the morning but much different by the close.
  • Buy stocks in top-performing industry groups because this is where the true market leaders tend to hail from.
  • Be careful of analyst recommendations.

"Just before Nvidia's earnings, someone was on television saying sell Nvidia ahead of earnings and buy Intel. I'm glad I didn't listen."

Aside from having more time to spend with the grandchildren, fishing and travel, many retirees in their early 60s and beyond, use the newfound time to hone their stock-picking skills.

If you're looking for a sound investing system, a good place to start is IBD Weekly and for timely coverage of market news and stocks on the move.

Growth screens like the IBD 50 , Sector Leaders or IPO Leaders can be used to find newer stocks still in the early stages of upside moves.

IBD workshops or Leaderboard summits are available for those wanting to learn what really makes a winning stock tick. Knowing those traits is the first step in becoming a truly good stock-picker.

Of course, people in the early stages of retirement have different risk-tolerance levels, with different time horizons.

Some are content to use 10% of their portfolio to speculate in individual stocks. More aggressive types might increase that to 20%-30% or more, especially in the early stages of a bull market. That's when it's pretty clear that fresh money is coming into the stock market from the sidelines, helping to drive up prices. That's always a good environment for growth stocks to run higher.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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