Walmart has one of the best-performing stocks of all time.

If you invested in Walmart (and reinvested all your dividends) when it first started trading publicly in 1972, you’d have made a staggering 168,188% return.

Just a $595 position in Walmart in 1972 would’ve made you a millionaire today.

Over that long run, Walmart has returned over 18% per year… but the biggest gains came in the 1980s and ’90s when the company was growing at a breakneck pace.

Today, growth has slowed, and so have the gains. Over the past 10 years, Walmart’s stock only grew 6.6% per year. That’s barely keeping pace with the S&P 500.

That’s what you’d expect from a large, mature company. Walmart is now a behemoth, and there’s not much room for it to expand. It’s become a stable, safe company.

Despite its slow growth, if you bought Walmart just 10 years ago and held on to it, you’d still be up over 90%.

But what if I told you there was a way to more than double those returns… safely?

You see, most investors don’t know there’s a simple trick to churn out even more profits from stable companies like Walmart than just buying and holding them…

It’s called “trading around a position.” And it’s one of my favorite strategies for juicing returns from cash cows…

How to Surf the Market’s Ups and Downs for Profits

When good investors find a great company with long-term potential, they buy it and hold for the long term. There’s nothing wrong with this strategy.

But if you want to make bigger gains, try this two-step method…

  1. Sell your long-term holding when it gets expensive.
  2. Buy it back when it gets cheap.

Let’s see how this strategy works using Walmart as an example.

As I mentioned above, even if you owned WMT over the past decade, you would have made 90% gains. Again, that’s not bad… but you could have more than doubled your returns by following the two steps above.

Here’s how…

First, you need to find out whether your position has become too expensive. To do that, you’ll look at its price-to-earnings (P/E) ratio. (The P/E ratio is a metric investors use to determine the value of a stock.)

Let’s say you bought WMT 10 years ago. By 2008, its P/E ratio had risen to over 17. That signaled the time to sell all or part of your position.

In 2010, WMT’s P/E ratio dropped below 13. That would have been a good time to swoop in and pick up shares again.

If you followed that strategy, you would have avoided the first of WMT’s two biggest drops over past decade (see chart below).

As you can see above, there are three more transactions you could have made to boost your profits (sell again in 2014, buy the dip in 2015, and sell again in 2016). By selling in 2014, you would have also avoided the second big drop.

The beauty of this system is its simplicity: All you have to do is check your portfolio at the end of each quarter—or four times per year.

If WMT’s P/E ratio was above 17 at any time during the past quarter, you’d sell your position. If you’re out of the position, wait until the end of the quarter to see if it dipped below 13 the past three months… If it did, buy it back.

By doing this, you would have made 205% on your money… and that’s assuming you made nothing on your cash when you were out of the position.

That crushes the 90% return earned by buy-and-hold investors.

You can see how this strategy would have worked in the table below, using an initial $10,000 position in WMT (gains and returns include dividends).

























As you can see, if you started with $10,000 and reinvested your entire proceeds after each time you sold, you would have made $30,513. That’s a 205.1% gain.

This strategy doesn’t only work for Walmart. You could use it for other large companies with predictable P/E ranges, like Apple, Wells Fargo, and Verizon.

Remember, not every stock will trade as neatly off its P/E ratio as these companies do. So you may have to use another valuation metric.

Bottom line: Trading around a position is one way you can increase the profits of large, stable companies when they get expensive.


Nick Rokke, CFA
Analyst, The Palm Beach Daily


Things are not looking good south of the border…

The iShares MSCI Mexico Capped ETF (EWW) tracks Mexican stocks. It’s down 22% since Donald Trump was elected U.S. president on November 8.

The Mexican stock market hasn’t been this low since it recovered from the Great Recession in 2010.

Here’s why it’s struggling…

Trump’s nationalistic rhetoric threatens Mexican industries. He wants to impose extra tariffs on U.S. companies that manufacture goods in Mexico and export them back home.

If Trump convinces more U.S. companies to stay home, things could get even worse in Mexico.

—Nick Rokke


Don’t chase bitcoin… Be patient and let it come to you…

Cryptocurrencies are a volatile asset, and bitcoin is no different. The digital currency zoomed past $1,100 per coin to start the year but has settled back under $900 since.

Palm Beach Letter editor Teeka “Big T” Tiwari says, if you’re patient, you can get into bitcoin at the right price before it explodes again. In today’s must-see 3-Minute Market Minder (transcript included), Big T says the recent sell-off is just a “knee-jerk reaction” to proposed Chinese regulations regarding bitcoin. Said Big T:

Quite frankly, we needed this sell-off. I don’t like it when an asset price goes up in a straight line because it’s really not a sustainable move. This is very normal action. I like it. I’d even like to see it come in a little bit more, waffle around, and then really set the stage for another move higher.

Click here to hear why Big T thinks now is a good time to snap up some bitcoin yourself.

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Wall Street Adopts Blockchain: The company that serves as the back end for lots of Wall Street trading—the Depository Trust and Clearing Corporation (or DTCC)—said it would replace one of its central databases with blockchain software inspired by bitcoin. DTCC’s databases are used by the largest banks in the world. And they play a role in recording and reporting nearly every stock and bond trade in the United States… as well as most valuable derivatives trades.

According to The New York Times, IBM will be leading the project… and aims to have it fully functioning by early next year. Wall Street is just the latest institution to get on board. We’ve already told you how Disney, Walmart, and Barclays Bank are using the blockchain. But it’s not too late to get in on this trend.


From Ernie A: In regards to your question in Monday’s Daily… Yes, I believe Donald Trump will be able to pull off a corporate tax cut… And it will give the economy a needed boost. However, to make America great again, Trump will need to rein in the IRS. Once free of IRS extortion, wage earners will kick the economy into high gear.

From Mark S.: I like the new format. I can read it more quickly.

The blockchain bandwagon is gaining steam. Have you hopped aboard yet? Share how you’re playing this new technological trend right here.

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You won’t hear about it from the media. But a major global organization is preparing to make a critical announcement this March. One that could ignite a $3 TRILLION buying spree… and shake markets to their core. There’s one simple move to take if you want to be on the winning side of this wealth transfer.
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