How to Find Assets Ready to Soar 100%

How to Find Assets Ready to Soar 100%
By Brian Hunt, Editor in Chief, Stansberry Research
August 3, 2009

Last Monday, we told you to ignore this uselesss trading advice: Before you get started with "real money," you should paper trade.

Thousands of people are getting into trading for the first time in their lives right now. They've tried the investing game for years... only to see brokers and financial advisors lose big for them in the Nasdaq bust, the real estate bust, or last year's stock-market crash.

Plus, the U.S. government is flailing around like a wounded animal right now. It's swiping at banks, car companies, commodity markets, and health care providers in a crazy effort to "do something" for voters.

Many reasonable people don't feel like they can invest for the long term anymore. But they're going to find a lot of bad advice, like the paper-trading nonsense. So here's another dose of reason for new traders...

Folks interested in trading must seek EXTREMES. This is your No. 1 job when it comes regularly pulling money out of the market.

An extreme is when the majority of market participants are leaning heavily to one side of the market. They occur when everyone either gets wildly optimistic toward an asset... or when everyone can't stand the thought of buying an asset.

When folks lean heavily to one side of a market, it's just like a rubber band becoming badly stretched: When it's stretched past the limit, it snaps back... and prices move at super speed.

The archives of Growth Stock Wire and DailyWealth are stuffed with examples of how "extreme" trading works:

In June 2007, Steve Sjuggerud described how commercial real estate was extremely expensive and extremely popular. He recommended shorting the sector. The average commercial real estate stock fell 66% over the next 18 months.

In April 2008, I warned the world of a coming decline in agriculture stocks. Investors were wild for ag stocks... and willing to buy them for extremely high valuation levels of 40-60 times earnings. Ag stocks in general fell over 75% in months.

In January 2009, Jeff Clark told us about an extreme opportunity in platinum. The metal was extremely oversold and extremely cheap. It climbed 50% off its bottom in just months.

And in April 2009, commodity analyst Matt Badiali described how oil-service stocks were extremely oversold and extremely cheap. His readers made more than 100% in just a month on a microcap oil stock.

I'm not mentioning these trades to boast. I simply think there's an incredible lesson new traders can learn by going over how these trades worked.

This Popular Trading Advice Is Terrible

A Trader's Best Friend

You see, it's the same story over and over – find assets that are in "rubber band" territory. Find extremes in sentiment, valuation, and price action. Trade against the crowd.

After you've set aside your "trade small" fund, focus on becoming an extreme trader. It's the easiest strategy you'll ever find for making quick profits with your trades.

Good trading,

Brian Hunt

Jim Rogers and Marc Faber agree: Stay out of China
Faber says economy isn't growing as fast as China reports...

Legendary investing firm just loaded up on this stock
33 consecutive years of dividend increases...

Nancy Pelosi is going to attack this industry
"They are the villains in this..."

•	Steel prices gain 13% in July, their first monthly gain in a year.
•	Indian outsourcers Infosys, Wipro, and Patni Computer hit new highs.
•	Paper companies surge... Schweitzer-Mauduit, Orchids, Clearwater make 52-week highs.
•	Earnings today... Clorox, Humana, Molson Coors, Tyson Foods.

	Last	Change	52-Wk
S&P 500	979.26	+0.30%	-21.82%
Oil (USO)	36.22	+1.20%	-64.30%
Gold (GLD)	93.41	+0.16%	+2.28%
Silver (SLV)	13.66	+1.04%	-20.86%
U.S. Dollar	78.43	-0.77%	+7.66%
Euro	1.43	+0.95%	-9.03%
VIX	23.09	-1.45%	-1.49%
HUI	361.15	+0.22%	-10.37%
10-Year Yield	3.67%	-0.04	-0.32

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Company	Sym	Industry
MedQuist	MEDQ	health IT
Schweitzer-Mauduit	SWM	paper products
Constant Contact	CTCT	marketing services
Sapphire Industrials	FYR	acquisitions
Penske Automotive	PAG	auto dealers
Sinopec Shanghai	SHI	synthetics
Starbucks	SBUX	coffee
Symmetricom	SYMM	telecom
Stein Mart	SMRT	clothing stores
Buckeye	BGH	oil & gas pipelines
Patni Computer	PTI	business services
Inergy	NRGY	gas distribution
Valspar	VAL	building materials
ASML Holding	ASML	semiconductors
Orchids Paper	TIS	paper products
Orthovita	VITA	medical devices
Acme Packet	APKT	telecom
GSI Commerce	GSIC	catalog fulfillment
Vina Concha	VCO	wine
Pacific Rubiales	PEGFF	oil & gas
Suzuki Motors	SZKMF	motorcycles
Bank of Montreal	BMO	bank
Lithia Motors	LAD	auto dealers
Clearwater Paper	CLW	paper products
Valassis Comm	VCI	marketing services
Cooper Tire	CTB	tires
Cheesecake Factory	CAKE	restaurants
Medarex	MEDX	biotech
Check Point	CHKP	software
Ford Motor	F	Big Auto
OMNOVA Solutions	OMN	chemicals
Ebix	EBIX	business services
United Refining	URX	acquisitions
Universal Forest	UFPI	lumber retail
HLTH	HLTH	health IT
Allied World	AWH	insurance
Energy Transfer	ETP	oil & gas pipelines
Infosys	INFY	software
AEP Industries	AEPI	rubber & plastics
Orthofix Int'l	OFIX	medical devices

Company	Sym	Industry
Lexmark	LXK	printers
Alliance HealthCare	AIQ	medical research
Gold Standard	GSTP	gold mining
HUGHES Telematics	HUTC	telecom
Reliance	RLBS	bank

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