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CREATING YOUR PORTFOLIO USING SYNTHETIC STOCK
Free Webinar with Todd “Bubba” Horwitz
In May of 2019, the markets were down across the board. Both the Dow Jones Industrial Average and the S&P 500 had fallen 6.8% while the Russell was down 8.0% and the Nasdaq down 8.3%. Despite the selloff, we added huge gains and five Mega-Trades for another monster week at Bubba's Equity Portfolio Management.
Our Trend Trading system is the best in the industry and, as long as you follow our rules in keeping your emotions and opinions out of the markets, you'll find success. Our algorithm sets you up for home runs while minimizing risk and maximizing profits no matter what the markets are doing!
Join us this Saturday for Bubba's Equity Portfolio Management and learn to enjoy the ups and downs of the market. Capture huge gains with minimal risk by always being dressed for the party. Choose from one or all of our six model equity portfolios and never have another rotten week trading again.
Tomorrow, you could begin doubling your account every single month starting with one letter.
The letter will come from a 20-year trading professional named Ian Cooper. He says, “In 2017, following my trades you would be doubling even tripling your account some months. Let me show you how.”
He will show you exactly what to do... and he’ll give you the blueprint for just $1.
Understanding Leverage - The Key to Big Profits
by George Angell
If you are like most wage-earners who work for a living, you already know how hard it is to make money. There is only one of you and only so many hours in a day. Whether you are paid on any hourly basis or an annual salary, the problem is the same – there is only so much you can do no matter how hard you work or how skilled you are.
Take the case of a teenager working at the local hamburger joint. Even long hours and overtime won't propel a low-paying wage earner into the high-income brackets. This is why your parents probably advised you to stay in school and get a good education. But let's look at such an individual and see if his high earnings really offer the opportunities to gain wealth. Consider the high-paid doctor or attorney. Sure, they can bill out their time in the hundreds of dollars per hour, but still their earning power is restricted.
Why?
Because the doctor or attorney – not unlike the low-paid burger-frying teenager – is faced with a limited number of hours. To maximize their earning potential, most professionals have a highly efficient office staff. That's why an office worker will set up your appointment, another staff member will lead you to the doctor's office, and yet another will take your blood pressure. Only then does the doctor appear and dispense medical advice. His time is valuable.
The Multiplier Effect
Now what would you say if I told you that you could multiply your earning power by multiplying yourself? Impossible right? Instead of one wage-earning son working at the local hamburger joint for $5 per hour, you had ten (ignore the cost of supporting ten such individuals) earning a total of $50 an hour. Or if the local doctor could see 25 patients per hour instead of five? Now the amount of money would begin to look very interesting.
Leverage, in a sense, multiplies your efforts – but instead of multiplying your hours worked, it multiplies the impact of your money.
Think of your investment dollars as little soldiers sent out to conquer the investment world. Each dollar equals one soldier. Thus, lots of dollars would equal lots of soldiers. But what if instead of a one-to-one relationship between dollars and soldiers, each dollar purchased ten or fifteen soldiers? Pretty soon, you would have a sizeable army. Indeed, your competitors would be no match for you if they were forced to field an army purchased on a one-dollar-for-one-soldier basis. Your leverage would beat them every time.
The $100,000 House
Now it's no secret that a number of big fortunes have been earned in real estate. Typically, leverage will play an important role in the creation of this real estate wealth. Yet, ironically, real estate is only average when it comes to maximizing the impact of leverage.
Let's take an example of the $100,000 house. If you purchased a home for $100,000 by putting up the entire amount in cash, you would be unleveraged. This means you paid the amount in full and you are the owner. Now, if the value of the house increased by, say, ten percent to $110,000, your profit would likewise be ten percent. But if you purchased the home by putting up just ten percent, or $10,000, and the value of the home increased by ten percent of the total purchase price of $100,000, you would have made a 100 percent profit on the transaction. (We're assuming you sold the house in both instances and that interest costs and other fees were not a factor.) In this second illustration, you have leverage.
Simply put, leverage means you use a relatively small amount of money to control an asset worth much more. Remember this definition, because it is at the heart of why you can build wealth today starting with just a small capital base.
Trading offers many financial instruments that are highly-leveraged. And I don't mean on a ten-to-one basis either. Depending on the specific investment vehicle in question, the leverage might be a 20-to-one to more than $1,000-to-one! That means for $25 you control an asset worth $25,000! You don't have to do much arithmetic to see how only a modest amount of capital, using the magnifying power of leverage, could control assets worth millions of dollars. Indeed, such powerful leverage, when used appropriately, can magnify your earning capacity many, many times over. Moreover, once you enter into the true mega-buck category through the use of leverage, you don't need a huge move in the underlying asset you control. We are not talking ten percent here as in the illustration of the house. No, we are talking about relatively small percentage moves. Say, just one percent. Or one-half of one percent, or even one-quarter of one percent. One percent of a million dollar asset is $10,000. One-half of one percent is $5,000. And one-quarter of one percent is $2,500. Think you can get a one-half of one percent move in the value of an asset over a day's time? You better believe it! And lots more. Translated into the amount of money you put up to control that asset means huge, huge potential profits.
Leverage is a Double-Edged Sword
There's a downside to everything, of course, and in the case of leverage, the value of the asset can move against you. Taking the illustration of the ten percent move on the $100,000 house, a loss of that amount – to $90,000 – would wipe out the investor's capital. You put up $10,000 and you lost $10,000. You don't think the bank is going to take the loss do you? Now if you were only running a Savings and Loan in the Eighties!
Learn to Manage the Risk
Yet there is another way to cope with the downside impact of leverage. That is to learn to manage the risk. The key is to understand this risk and develop strategies for minimizing its negative effects. You may have heard that potential reward is proportionate to risk. In some instances, that may be true – but, significantly, not in all.
Here is a brief summary of what you need to know about leverage:
Leverage is the key to wealth-building through its magnifying effects. With leverage, a relatively small amount of money controls an asset worth many times its value. As a result, a favorable move in the value of the underlying asset results in a large percentage gain in the initial investment.
Leverage is not without its downside risk. Just as leverage can help you reap huge profits, it can enhance the risk under certain circumstances. This risk must never be minimized because preserving capital is at the heart of any wealth-building program. Without the risk, however, there would be no potential for gain.
The risk can be successfully managed. There are a variety of ways to manage risk.
PLEASE READ: Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
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