| DAILY ISSUE Hello, Reader. On Friday afternoon, the White House doubled down on its pledge to ramp up, starting today, 25% tariffs on Mexico and Canada, and a 10% duty on China… in retaliation for “the illegal fentanyl that they have sourced and allowed to distribute into our country.” While those tariffs hadn’t officially been implemented yet yesterday, the press secretary’s comments still added plenty more drama to this week’s already chaotic markets. If this recent bit of extreme turbulence has taught us anything, it's that you never know when a stock is going to move. And that goes for better or worse. (Although, of course, we prefer "for better.") President Trump’s promised tariffs follow China’s DeepSeek R1 large language model shocking – and rocking – the markets earlier in the week. KLA Corp. (KLAC), for instance, fell over 6% following the news. As a major supplier to the electronics industry, the company is, therefore, a major AI Revolution supplier as well. However, KLA has since clawed back those losses after reporting earnings on Thursday that beat analysts' expectations. In fact, KLAC is now inching back toward highs it hasn’t seen since October… proving that we can never truly anticipate a stock’s move. The same goes for the tech-heavy Nasdaq Composite, which dipped more than 3% on Monday – but has since mostly recovered after tech giants like Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Meta Platforms Inc. (META) all beat Wall Street earnings estimates. So, while we don’t yet know what will happen in the market short term, we do know that something will. Now, I’ve been a professional investor for over 40 years, and I’ve yet to find anyone who can predict short-term moves with accuracy. Nobody really knows why a stock goes up or down over the short term. It’s almost entirely based on mob psychology. However, in the long run, stocks trade higher or lower based on things you can analyze and forecast, like fundamentals, growth, earnings, and big-picture trends. That’s why I’ve found that your odds of correctly predicting stock price movements are higher over the long term than the short. To take advantage of the security that long-term trades offer, I use a specific trading strategy that I’d like to share with you today. And it starts by using a powerful tool that could magnify your gains: leverage. Let me explain… | Recommended Link | | | | A switch was flipped last September that could rapidly accelerate a massive global economic shift. The NYT says it will: “split history into before and after.” No matter where you live or what you do it will have huge implications for you. Click here for 3 steps to prepare. |  | | A Simple but Powerful Tool Longtime readers have likely heard me use the term leverage before. The word comes from a simple machine – the lever. A lever creates a mechanical advantage that can be used to move something very heavy using only a small amount of effort. As the image below shows, the wooden lever is used to move the large boulder. 
It’s a simple tool, but a very powerful one. Now, it’s a short step from this example of mechanical leverage to financial leverage. You’re still moving something big with a small amount of effort. Only instead of lifting a boulder, you’re controlling a valuable financial asset with only a small upfront stake. An example of financial leverage that most of you are no doubt familiar with is putting up a small down payment to buy a house. The home mortgage is actually a great way to illustrate the power of leverage. Say you want to buy a $500,000 house. You may have to put down $50,000 as a down payment. Now you control a valuable asset for a fraction of its overall value… and the power of leverage is revealed when the value of the home goes up. Let’s assume for the sake of argument that the day after you buy that house, it rises in value to $600,000. Now, if that happened, you’d be happy if you paid the full price in cash… but you’d be thrilled if you used leverage to purchase that house. You see, if you bought the house for $500,000 cash and then sell it for $600,000, you make $100,000. That’s a nice 20% profit on your investment. But if you used a mortgage, you only paid a $50,000 down payment and borrowed the rest of the money from a bank. That means if you sell the house the day after you bought it, you’d pocket the same $100,000 gain as the guy who paid cash... but you don’t make a 20% gain… You make a 200% profit – or 10 times more! Because you only invested $50,000 to get that $100,000 gain, you put up just enough money to control the asset. In other words, you used leverage. Here’s where my long-term investing strategy comes in play… Taking a Leap With LEAPS One way to use leverage in a wise way is with long-term options, called LEAPS. That stands for Long-Term Equity Anticipation Securities. Now, if you are unfamiliar with options, be sure to first check out my free, special broadcast where I detail everything you need to know about this financial instrument. But simply put, options are legal contracts that allow investors the right (but not the obligation) to buy or sell a specific security at an agreed-upon price within a set period of time. Every option is identified with a specific stock. So, whenever you place an options trade, the movement of the underlying stock will affect the success or failure of your investment. Essentially, they are side bets on a stock’s price that allow investors to make enormous payoffs if they get things right. And LEAPS are long-dated options whose expiration dates are one to three years away. I use them to find my paid subscribers gains of 100%, 200%, 1,000%, and more. For instance, back in 2019, I recommended using a leveraged play on Wheaton Precious Metals Corp. (WPM). And when that mining stock popped 114% in less than a year, my LEAPS recommendation soared as much as 525%! On a $5,000 investment, you could have realized an incredible $20,415 in profit. And it’s all because of the leverage power you get with long-term stock options. And in late 2023, I recommended a LEAPS trade on GE HealthCare Technologies Inc. (GEHC). In two months, that stock rose 24%, but the gain on the LEAPS was 157%. Bottom line: Time is the critical factor with stock options. You can pick the right stock and the right direction... but if you don’t have the time frame right, you lose most or all of your investment. It’s my belief that long-term options give you a greater chance to be right because they give you more time for the stock to move in the direction you want it to. That is why I exclusively use this investment strategy in my Leverage service. When used selectively and judiciously, like we do at Leverage, options can impart powerful benefits to an investment portfolio. To use this powerful investment strategy yourself, learn how to join me at Leverage today. Regards, | 
No comments:
Post a Comment