Doc's note: It's challenging to beat the market when it keeps hitting new highs. How do you find opportunities that could still help you profit?
Today, my friend and colleague Dr. Steve Sjuggerud shares his three rules for finding investments to help you consistently beat the market...
The key to successful investing isn't what you'd expect...
You don't need to understand everything. You don't have to look at every number. And you can certainly know too much – which often leads to your ego getting in the way of common sense.
Instead, the key is finding the right things to study.
You simply need to figure out what really matters... what works... and then forget everything else. Everything else is just noise. And focusing on the noise will distract you from what's important.
I've spent thousands of hours researching what works in investing. And I've come up with a simple concept that has proven to be an incredibly successful way to make money.
I built it into a simple system of my own. It can do what my finance professors always said was impossible: consistently beat the market.
And today, I'll share it with you...
If you're familiar with my work, then my investing system might sound familiar. I buy things that are... 1) cheap, 2) hated, and 3) in an uptrend.
That might seem simple. But finding investments that are cheap, hated, and in an uptrend is hard. They don't come around often. And when they do, it certainly doesn't feel good buying them.
But these are the pieces that matter if you really want to succeed when investing. And to me, they're all that matters when making any investment.
First, you've got to understand value. You want to understand what you're buying and how much you're paying for it. The exact valuation measure isn't what's important. But getting a feel for value – including the value relative to other assets – is crucial.
Then, you want to buy something when others aren't interested... when it seems like the world hates your idea. When that happens, the worst of a decline is likely over. After all, who's left to sell if everyone hates an investment?
Now, here's a very important detail...
Neither of the above pieces matter if prices are still falling...
If there's one thing I've learned in nearly 30 years of investing, it's that prices can always fall further than you'd imagine. And that means you must wait for prices to begin moving higher. That's the market's way of telling you that things have turned a corner.
When this all works, you end up buying at a great price at the perfect time.
That's exactly what happened in 2010, when I started pounding the table on real estate...
The whole world had given up on real estate after the housing crash and the financial crisis it sparked.
But for me, the crash was the most obvious buying opportunity I'd ever seen. Real estate was dirt-cheap and completely hated, but the worst was behind us. Things were already getting better. But no one could see it.
I spent the next few years buying up as many properties as I could... many of which I still own. And I sold several for hefty profits along the way.
I bought a cheap, hated asset in the start of an uptrend. It was my investment system in action. And it has worked out perfectly as real estate prices soared in value.
Now, you don't need to follow my investment system to make money in the markets. But I urge you to find what works for you – and stick with it.