Step #3: Buy sectors that outperform most other sectors.
Hundreds of studies invariably prove that investing in stocks or sectors that are RELATIVELY STRONG yields profit returns that are superior to the benchmark averages.
Again, fewer than 10% of fund managers do better than the benchmark averages.
Since Relative Strength Investing has proven to beat market averages that 90% of professional fund managers are unable to beat, we think it’s INSANE to invest in any other way.
Here are a few of the studies proving the superiority of Relative Strength.
Here you see four lines and each line represents a group of stocks. So basically each of these lines represents a basket of stocks.
You could say each line represents a hypothetical account value of four different investment accounts following certain investing rules.
Imagine that four investors followed a different set of rules, and we tracked their account growth over 25 years.
In fact, the investor who’s represented by the orange line multiplied his account by more than 28 times.
You can see the bottom two investors only multiplied their account by five or six times.
So what you’re looking at are four different hypothetical account values.
Each of the four accounts followed a different set of investing rules.
Focus on the best performing one - the orange one.
That one line, from 1990 to 2015, represents one investment model that looks at all U.S. stocks and ONLY owns the stocks that are showing superior strength in the long-term and in the short-term.
Every month, the model is rebalanced so once-a-month the model looks at every stock in the stock market and says…
“Okay… We will only own what’s showing short-term and long-term RS and nothing else.
Anything showing weakness in the short-term or long-term is SOLD, and is no longer a part of the orange portfolio.
So the orange line shows the performance of a hypothetical model or a hypothetical stock account that owns ONLY stocks showing short-term and long-term “Relative strength”.
Relative strength is just a simple math equation and you can easily find out in seconds if any stock is showing strength, relative to the stock market.
And there are places where you can quickly filter down so you’re only selecting from stocks with this classification.
You want to filter out the other three groups when selecting the right stock or the right sector.
So basically, you want to own stocks in sectors that institutions are buying the heck out of like I said in Step #2. And in this rule I’m showing you how to make it even more likely you’ll own a big winner and that’s to buy stocks that are showing long-term RS and short-term RS.
How much do you think your life will change after you master this 3-step process I’ve just shown you?
And I mean truly MASTER it as I have…
Think about what it will be like when you’re able to pick trades more confidently, execute them more confidently, and profit more confidently.
In fact, I want you to think about what you would do if you were able to use my 3-step process to DOUBLE your ENTIRE PORTFOLIO’S VALUE in the next few years.
That’s not impossible, even when you’re using conservative, proper risk management strategies like the ones I employ.
In fact, one of my members, John, just recently wrote to me about how I helped him double up his 401(k) account…
And once you’ve done something like that, by the power of compounding interest, your potential gains only get bigger and bigger, and those big potential returns feel absolutely GREAT I promise you.
Stop back tomorrow because I have much more valuable information for you!
Founder, True Market Insiders