Most people don’t appreciate two basic facts about the stock market: all stocks have a 52-week high and low, and in the long term the stock market has always gone up.
The Dow Jones hit its all-time low in 1931 when it fell to 31 – today 87 years later it’s almost 26,000. Just in the last 8 years, the Dow Jones has risen from 6,500 to almost 26,000.
Along the way there have been many stock market ups and downs that cause stress and uncertainty for the average investor. But not for those savvy investors who know how to profit from these ups and downs.
These trends have always existed so why not use an investing method to take advantage of this? I thought of a contrary investing method that logically tells a person to buy low and sell high would be the best way to invest.
Here’s an example of a great dip: in 2009 during the financial meltdown you could buy a share of American Express stock for $9 a share – today 8 years later a share of American Express sells for $99 a share!
I found a great contrary investing method when I discovered Robert Lichello’s Automatic Investing Management (AIM) method. One unique feature of his method is that it keeps half of your investment in cash so you have money to buy when the stock market goes down.
Since an investing method is only useful if it is making high profits I made changes to the AIM method. I found that long-term options (LEAPS) on safe stocks like Dow Jones stocks worked very well. My LEAPS portfolio of 10 Dogs of the Dow stocks (10 Dow stocks with highest dividends) is up 275% in 4 years. $60,000 has grown to $225,000, and I’ve kept roughly half the portfolio in cash the entire time.
This contrary investing method will work forever and it loves big recessions and bear markets. In fact you will make a lot more profits long-term because of great buying opportunities during recessions when the herd goes crazy and sell emotionally.
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