Friday, June 29, 2012
Read This Before Your Next Trade - Weekend Wisdom
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Whether you're bullish on the market or bearish; whether you believe the bottom is in, or not; it's now more important than ever to make sure you're doing everything you can to get the most out of your trades.

Regardless of which camp you put yourself in, there will be distinct winners and losers as we move forward. So before you make your next trade, please read this first to learn how to put the probabilities of success on your side.


Knowledge Is Power

We've all heard the old adage: knowledge is power.

It's a great saying because it's true.

And that saying couldn't be truer than when it comes to investing.

Take a look at your last big loser for example. After analyzing what went wrong, you soon discover some piece of information that – 'had you known that, you never would have gotten into it in the first place'.

I'm not talking about things that are unknowable, like inside information or surprise announcements that can catch even the most professional of professionals off guard.

I'm talking about things that you could have known about or SHOULD have known about before you got in.


Did You Know?...

  • Did you know that roughly half of a stock's price movement can be attributed to the group that it's in?

  • Did you also know that often times a mediocre stock in a top performing group will outperform a 'great' stock in a poor performing group?

  • And did you know that the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1?

  • And did you also know that the top 10% of industries outperformed the most?

Was your last loser in one of the top industries or in one of the bottom industries?

If it was in one of the bottom industries, you should have known to not take a chance on something with a reduced probability of success.


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That's what is meant by knowledge is power. Knowable things that you need to know.

That's not to say that stocks in crummy industries won't go up -- they do. And that's not to say that stocks in good industries won't go down -- because they do too.

But more stocks go up in the top industries, and more stocks go down in the bottom industries.

And since there are over 10,000 stocks out there to pick and choose from, why settle for one with a reduced chance of making any money?


Did You Know?...

  • Did you know that stocks with 'just' double-digit growth rates typically outperform stocks with triple-digit growth rates?

  • Did you also know that stocks with crazy high growth rates test nearly as poorly as those with the lowest growth rates?
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