If you’re worried about your risk in this market, you mustn’t do anything rash.Yes, the market will continue to jump up and down as we work our way through the summer months.So be prepared to see more 200- and 300- point market swings as summer wears on, uncertainty grows about the Fed’s money-pumping policy, and the market continues to get incredibly selective.
That’s why the last thing, and I repeat, the last thing you want to do NOW is run in and out of this market as the economic winds seem to change direction daily.That’s not managing your risk—that’s increasing risk.
The reason is simple:
If you get caught up in the panic moves, you’ll end up not only taking a whole lot of short-term losses on good stocks that will only go up but also miss out on some huge profits when key stocks break out as our continuing research shows.So today I’m going to cover what how you can manage risk (in good times as well as bad times), all supported by the very same market-beating methodology that I use for my Blue Chip Growth newsletter.
My Winning Risk Management Strategy
Spot trends early
As I’ve discussed, panic is a powerful force that will get you in trouble if you let it take over.In this market, your best defense is a strong offense: Keep track of sector news, global events and economic data and act accordingly.The fact that you read this blog is a great start—in the past week alone I have covered the upcoming earnings season, market-moving economic news and of course why the Fed has the market so riled up.I recommend that you bookmark this blog page if you don’t have the time to individually track major developments on Wall Street.If you really want to ratchet up your investing strategy to the next level, I’ll give instructions on how you can join Blue Chip Growth risk-free at the end of this blog.
Squeeze the risk out of your investments
The path to profitable investing in all markets and at all times isn’t paved with “hot stocks,” but by managing your risk—selecting stocks incredibly strong fundamentals that will not only weather financial storms with profits but also continue to rise when the clouds clear.
As my Blue Chip Growth readers can tell you, I have created time-tested “Rules for Diversification” that help squeeze the risk out of your investments.Current readers can access the complete list here, but is a taste what I recommend my Blue Chip Growth members do in this market:
- Stick to a mix 60/30/10 mix of “conservative”, “moderately aggressive” and “aggressive stocks”—run your holdings through Portfolio Grader to determine where they fall.
- To limit risk and provide big returns, make sure you never have most of your money in just a handful of holdings.I recommend that any stock investor maintain a portfolio of at least 15 stocks.
- The other part of owning the right amount of stocks is "equally weighting" your stocks: You should never let a single company represent more than 10% of your portfolio.
Hold on for the ride
Now that you’ve taken note of the latest trends and have built a well-diversified portfolio, take a deep breath.Even if the market takes a turn for the worse and others are panicking, “hold the course” and use my Portfolio Grader tool to add highly-ranked positions on dips instead of simply throwing in the towel.Blue Chip Growth members—stick to the premium recommendations and Buy Below prices I have on our exclusive Buy List.
My Top Low-Risk Profit Maker
Now that you have a good sense of how to manage your risk in this market, I’d like to introduce a special recommendation to you today: Kimberly-Clark Corp.(KMB)
My favorite company right now is a little-risk household products company that has outperformed the Dow over the last 2- and 5-year periods.This is why State Street owns 18 million shares, why Vanguard Group owns another 18 million, and Blackrock owns 10 million, but also why the top 10 mutual fund holders together own more than 37 million shares.
This is a conservative stock that I think is headed towards $150 in the next six to 12 months.Our risk-management-based research shows just that.
A quick look at these key statistics, and you’ll agree.
- Earnings growth, +13%
- 52-week change, +37%
- Return on equity, +35%
- Boasts a 21 P/E, which is under the industry average (so you’re not overpaying for growth)
- Four consecutive quarters of delivering positive earnings surprises
- Scheduled to outperform the industry by four times this quarter.
I hope you’re beginning to see why we own this company, the big money owns this company, and why you need to own this company too.We are projecting solid 20% to 50% gains here in the next six to 12 months—don’t miss out.
Since we added this to our Buy List, we’re up just 5%—so clearly it’s not too late to get in.But this may be your last chance as we’re seeing volume increasing here too, as the market continues to get more selective.That’s why I’m upgrading my Buy recommendation on this and suggest you add it to your holdings (Blue Chip Growth members can access my exact Buy Below price here).
Three More Profit Makers to Add Right Away
In addition to KMB, I have three other Profit Makers that are all excellent buys at current prices—Blue Chip Growth members can read all about it in my exclusive Special Report, online now.
For everyone else, here’s a sneak preview of our top three positions that will not only protect you from the economic headwinds headed your way but position you to profit as well as the market continues to favor stocks with solid earnings and outstanding fundamentals.
The retail sector is estimated to grow by $506 billion and reach almost $1.7 trillion in salaries by 2020, making it the largest in employment output among all industries.This will be driven by personal consumption expenditures, which the government expects will hit $12 trillion in eight years.The result will foster a windfall in consumer spending across a number of retail sectors and consumer finance sectors.
We’re already beginning to see signs that this growth will be huge, as our top multiline retailer just reported an 8% increase in revenues and beat analyst estimates for the last reported quarter.Since we added it to our holdings, our readers have already seen their stake rise 31% to date.
Profit Maker No.2
Construction employment is set to rise 7.4 million in 2020, thanks to the rebound in the housing sector along with an increase in residential and residential investment, which is being driven by lower housing prices and low interest rates.Companies that sell everything from housing supplies to paint should make a bundle.This is why we are projecting 50% annual returns in our top pick over the next three to five years.
Profit Maker No.3
The wireless broadband technology revolution is still underway as many more people still need to be connected to the Internet at cable modem speeds from a handheld mobile device.It’s precisely this jump in data usage that will create huge profit opportunities for the gatekeepers of wireless high-speed data access, because they will profit from every 1 KB of data that’s transferred as users send files, stream music or videos, and store data in the cloud.For this Profit Maker, management is expecting between 4% and 5% sales growth and between 10% and 15% earnings growth.This is a huge company and trust me when I say those are some big dollars heading their way—and I think they’re being conservative!
Your Next Steps To Take
These are just three of our Buy List stocks set to lead the market higher in 2013.So if you already subscribe to Blue Chip Growth, you’re already on the right track to minimize risk and maximize returns.
If you haven’t joined the Blue Chip Growth community yet, it could hardly be easier.The names of my top three profit takers as well as complete buy instructions for KMB are yours free for simply accepting a 100% risk-free trial to the Blue Chip Growth.In addition, you’ll also discover our proven method of investing that’s beaten the market by $3-to-$1 along with the 25+ Buy List stocks we are recommending for immediate purchase.