An investment vehicle that can transform your portfolio returns… historical case studies with the numbers… a real-time example with Corning Today, let’s take a break from the headlines so I can show you a real-time case study illustrating how one small, simple change to your investment approach can transform an 86% winner into a 550% windfall. Better still, this is an easy switch-up that you can make in your portfolio beginning now. As always, it’s important to understand the pros and cons of this approach (which we’ll discuss), but the potential payday can be enormous – which is why many of the world’s most successful money managers regularly use versions of this strategy. And when applied to some of today’s most explosive sectors? The returns could be through the roof. Bottom line: Few things provide as much bang for your buck as the market tweak we’re about to discuss. But let me show you… Let’s rewind to November of 2023 when our global macro expert, Eric Fry, was considering a trade on glass and ceramics leader Corning Inc. (GLW) For newer Digest readers, Eric is a “macro” investing expert and the analyst behind the trading service Leverage. He’s also one of the most successful analysts in the newsletter industry. While most investors are lucky to find one or two 1,000%+ recommendations over the course of their career, Eric has found 42, more than anyone we know of in our business. Turning to Corning, while many investors still think of it as a stodgy glassmaker, it’s long been a tech leader thanks to relentless innovation and a focus on high-performance materials tailored to emerging industries. This is partially what caught Eric’s eye. In our November 28, 2023, Digest, we spotlighted his analysis of Corning, concluding with this takeaway: I expect the coming decade to reward Corning with a level of profitability that few investors anticipate today. As a small bonus, the stock pays an annual dividend yield of 4.2%. Eric went on to include Corning as one of his “Top 7 Stocks for 2024” for his Smart Money readers. Now, full disclosure – I would become so convinced by Eric’s research that I eventually bought the stock myself. But while it’s been a profitable position for me, I’ve left a tremendous amount of money on the table compared to Eric’s preferred way to play Corning. How one small change could explode your returns In his service Leverage, Eric doesn’t recommend stocks. Instead, his preferred investment vehicle is a LEAPS trade, which stands for “Long-Term Equity Anticipation Security.” You can think of this as an option with a longer-dated expiration, usually lasting from one to three years. Eric prefers LEAPS for a variety of reasons, including: - The “price of admission” to a particular trade is lower. For example, buying call options on 1,000 shares of a stock costs much less than buying 1,000 shares of that stock outright
- You benefit from leverage (hence, the name of Eric’s service). As he writes, you “put down a small investment to control a large amount of stock”
- You have much smaller downside risk, compared to a stock. For example, the buyer of a call option can’t lose more than the cost of the option, no matter how far the underlying stock might fall.
There’s also the added benefit of having more time for your investment thesis to play out. And this can provide investors a huge advantage… which might not appear to be a huge advantage in the moment – golden handcuffs. | Recommended Link | | | | Eric Fry called many of the biggest market shifts of the last 20 years — the popping of the Internet bubble, the collapse of the housing market, even the bear market of 2020. Now he’s launching a new venture focused on an underappreciated slice of the trading market, where anyone can turn small stock moves into huge gains. For instance, when Vipshop stock rose 88%, Eric’s recommendation soared 223%. He’s just released a new video with the whole story, including how to get three new trades he’s just released. Click here now to get the critical details. |  | | An illustration of the power of patience – and why that favors LEAPS Borrowing from one of Eric’s illustrations, let’s look at Vale S.A (VALE), the large Brazilian iron ore company. On October 9, 2015, an investor could have purchased VALE stock or a VALE LEAPS (a call option). Whatever was picked, this would turn out to be a poor time to launch a bullish trade. Between early October 2015 and late January 2016, the share price of VALE slumped from more than $5 to less than $3 – a loss of more than 40%. Meanwhile, the buyer of the January 2017 LEAPS call was looking at a near-complete loss of his investment. The price had tumbled more than 90%. Now, put yourself in the shoes of these two investors… If you’d been in the stock and suffered that 40%+ drawdown, there’s a fair chance you’d sell, locking in that loss. After all, 40% down is bad, but you still have a considerable amount of capital left. But if you’d been in the LEAPS option, down 90%, well, what reason is there to sell? You’re down so much that liquidating your position accomplishes nothing. Plus, you still have another year left in your call option. Why not let it ride? But most importantly, when you trade LEAPS, you protect yourself by using small position sizes, not necessarily stop-losses. So, when you enter a LEAPS trade, more times than not, you see it to the end because you’ve already protected your overall wealth by investing no more than a reasonable amount of money. And many times, this can be an enormous benefit. Here’s Eric illustrating why with VALE: As the VALE share price zig-zagged its way higher over the next few months, so did the price of the January 2017 option. Finally, in late October of 2016, the price of the January 2017 call overcame its losing ways and started moving strongly into the black. By the end of November 2016, the price of this option had doubled from the original purchase price in October 2015 – more than one year earlier! Then, by the time this option expired in January 2017, it would have delivered a gain of more than 250%. In this case, time did not merely heal a wound, it healed a wound and then delivered a huge profit. This illustrates the potential “golden handcuffs” benefit that can play out when you place a LEAPS trade. Back to Eric with the bottom-line takeaway of your risk/reward tradeoff: With LEAPS, you’re still risking money on a position that could expire worthless, but you gain an important advantage: A longer timeframe for the underlying shares to move in the direction you want… Some option trades will fail completely and “zero out” [but] often, option trades will work out beautifully – producing gains of 100%, 300%, or more. Let’s now circle back to Corning to illustrate a real-time trade that just worked out “beautifully” as Eric put it. Your choice: 86% or 550% gains? This comes from a trade alert that Eric sent his Leverage subscribers on December 21st, 2023: Because [Corning] has been languishing for quite a long time, option premiums on it are cheap. Obviously, the lower the entry price, the better the risk-reward characteristics. So, I suggest taking advantage of this “discount pricing” to buy an option that expires in January 2026… At this point, I view the stock as a sort of “coiled spring.” Even a modest economic recovery could produce significant earnings growth. “Coiled spring” was a suitable analogy. As you can see below, between December 21st, 2023, and earlier this week, Corning’s stock jumped 86%. 
But for Eric’s Leverage subscribers who played GLW with LEAPS, they did much, much better. From Eric’s profit alert this past Wednesday: Corning Inc. (GLW) continues to gain fans as a dynamic “AI play.” The stock has soared more than 80% during the last year, as an increasing number of investors recognize Corning’s growing role in the AI revolution. Earlier today, analysts at Citibank named Corning their “Top Pick for 2025.” As a result of the stock’s strong recent gains, the GLW Calls in the Leverage portfolio have advanced more than 550%; and they still have one year to go before they expire. During that lengthy timeframe, these options could easily pile up even larger gains. That said, I typically recommend booking partial profits along the way, while still leaving the door open to additional gains down the road. Therefore, I suggest capitalizing on GLW’s recent strength by selling an additional one-quarter position in the GLW Calls for a gain of more than 550% on that partial sale. A well-deserved “congrats” to all the Leverage subscribers out there. This isn’t a rare outcome This return discrepancy between a stock and a long-term option isn’t rare. Other examples from Eric’s trading history include the gold ETF GLD climbing 9% while Eric’s LEAPS play went up 117%... There was also the bond ETF TLT rising 18%. Over the same period, Eric’s preferred LEAPS play jumped 107%... And his stock recommendation of Vipshop Holdings Ltd. (VIPS) returned 22%, but his LEAPS play exploded 252%... However, Eric’s biggest LEAPS winner came from Freeport-McMoran Inc. (FCX). Over the same period that FCX rose 491%, Eric’s chosen LEAPS position return 1,506%. That turns $5,000 into more than $55,000. Eric just put together a free research video that dives into more details on the strategy. It provides a more detailed analysis of how this simple tweak can transform your portfolio returns. | Recommended Link | | | | One man is saying: FORGET most stocks. Because his strategy ignores 99% of stocks out there… And focuses on one — just one — to deliver gains of 85% in 14 days, 120% in under 3 months, and even 222% in just 8 days. In this video, I’ll tell you the name and ticker symbol, completely FREE. Click here to watch right now. |  | | Consider the power of LEAPS applied to some of today’s cutting-edge technologies Given the rate of technological advancements, where do you think we’ll be in a few years with helicopter taxis… or quantum computers… driverless cars… or precision medicine… or artificial intelligence… or any number of amazing technologies advancing at blistering speeds? Now, consider a LEAPS position on leading stocks in these trends… bought at today’s prices… with the economic benefit of leverage… allowed to develop for one-to-three years (potentially, thanks to golden handcuffs). With that combination, a 1,500%+ return like Eric saw from FCX is absolutely in play. Potentially, much higher. Stepping back, there’s a lot to be bullish about today… And we’ll return to those bullish headlines and stories on Monday. But don’t miss how this simple tweak to the way you play those bullish stories can mean an enormous difference in your portfolio returns. You’re investing in the same trends… with the same underlying companies… based on the same fundamental/technical analysis… but the payoff can be multiples higher. For a deeper dive into how this works, here’s that link again to check out Eric’s latest research video. Have a good evening, Jeff Remsburg | 
0 Response to "A Simple Tweak to Explode Your Returns"
Post a Comment