Back in the ‘80s, the local arcade was practically a kid’s life.
One game especially used to catch my eye: the crane game. The promise of grabbing that prize, for the tiny admission fee of a quarter, was irresistible.
Of course, those games always had a reputation for being “rigged.” Whether it was a weak claw grip or finicky controls, most people who tried to win the crane game lost.
Still, there was always that one kid who always managed to win! I knew one back in the day. She had the right system.
She’d walk up and put her coins in the machine. Then she went to work… moving the claw above the best prize. Then… a minor nudge forward… and a quick tilt to the left. She’d look around the corner of the machine and make sure she was all lined up… and push the button.
With a release from on high, the claw dove into the pit of prizes. A huge smile grew from ear to ear as it came back up with her stuffed animal of choice.
Here’s why I’m telling you this…
The crane game is just like my approach to buying stocks: Find the best and leave the rest. Then position yourself appropriately… and when everything lines up, you strike.
The key is to consistently play a game with a positive edge. Just like Betty Sue had her strategy of using two viewing angles before sending the crane down, I look at stocks in a few different ways before making a decision…
How I Win the Crane Game
There are seemingly endless ways investors can squeeze juice from the market. Some follow news. Some glue their eyes to stock charts.
I follow big money – the massive institutions, hedge funds, and money managers of Wall Street. These institutions are what keep the gears of Wall Street turning. And their decisions have a huge impact on the direction of individual stocks.
It hasn’t steered me wrong yet. My track record since launching Palm Beach Trader stands at a 91%-win rate with an average gain of 123%.
You see, I use an automated stock-picking system – which I designed myself – to be like a market arcade game. The only difference is, I “rigged” it to have the odds heavily in my favor. And I did that by tracking down when the big money is moving in and out of specific stocks.
This allowed the system to spot prized stocks and zero-in on them early – before the mainstream got ahold of the story. That demonstrates a game with positive edge.
This is the precise process that found SolarEdge Technologies, Inc (SEDG), which is up 480% since I recommended it.
It’s also the process that found The Trade Desk, up 766% since my recommendation.
And three more triple-digit winners in the Palm Beach Trader portfolio…
But there’s a specific factor to these wins that makes them really work. It’s not something most investors want to hear… but it’s the bitter medicine that everyone needs.
Give it Time
I don’t look to take profits on stocks until they’ve run for at least a few years. In my own portfolio, I actually don’t sell stocks at all. I let time do its work, and 100 years of stock market history shows that over time, most stocks keep rising.
Obviously, not all of our stocks win huge, or even win at all for that matter. We lose like everyone else. But here’s the key: it only takes a few prized outliers to transform a portfolio.
And a great time to find them is when markets pull back.
We’re seeing a bit of that kind of action today. As I write, the S&P 500 is down over 1%. The Dow and Nasdaq aren’t faring much better.
But I’m here to tell you: don’t fear the reaper. When stocks go on sale, it’s a good thing. It’s similar to when they refill the crane game to the top with new and possibly even better toys. That’s the best time to play!
I decided long ago to spend all of our time playing the most fun game I could find. It helps when history suggests that the system tilts the odds in our favor… So, these days, I’m constantly putting coins in the machine. Sometimes I win, sometimes I lose. But when I win, I always win big.
Like an arcade game, investing is not about winning on every single attempt. It’s about finding the game you can win, and exploiting an edge over time.
Understanding this early, and knowing to hold on for the long haul, will be what separates you from 99% of the other investors out there.
Patience and process!
Editor, Palm Beach Insider