Karim Rahemtulla, Author at Investment U https://investmentu.com/author/krahemtulla/ Master your finances, tuition-free. Mon, 29 Mar 2021 15:39:17 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.2 https://investmentu.com/wp-content/uploads/2019/07/cropped-iu-favicon-copy-32x32.png Karim Rahemtulla, Author at Investment U https://investmentu.com/author/krahemtulla/ 32 32 Maybe the Most Important Investment Advice You’ll Ever Read https://investmentu.com/important-investment-advice-2/ Tue, 24 Nov 2020 00:00:29 +0000 https://investmentu.com/?p=81975 The one great way to prepare for a down move.

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Editor’s Note: Karim’s fundamental article on risk and position sizing fits perfectly in today’s climate of market uncertainty. While the market has been fairly positive for the last few weeks, with COVID-19 on the rise and election uncertainty looming, you don’t want to get caught with your pants down. Check out one of our favorite articles on risk and what you can do to limit losses in your portfolio.

– Ryan Fitzwater, Associate Publisher


It’s only during down markets that investors think about risk. And by then it is way too late.

It’s akin to calling an insurance agent when your house is on fire and asking about that policy you should’ve renewed!

I bet that for every thousand investors who lose their shirts in a down market or when a particular stock tanks, there is just one savvy investor who prepared. The ratio may be even worse! The thing is, you want to be that one who prepared.

There are quite a few ordinary ways to prepare for a down move, and there is one great way.

It’s position sizing in combination with a stop loss. A stop loss is when you designate a specific price at which you will sell a stock if it reaches that level. It prevents you from taking a bigger loss than you want. For example, if you buy a stock at $10 and set a 25% stop loss, you are agreeing to sell the shares at $7.50 if they move lower. You lose 25% of your original investment and no more.

But just having a stop loss is not enough. Not by a long shot. A stop loss doesn’t keep you from losing the ranch if you happen to bet the ranch on a particular stock. That’s why position sizing is important and the combination of the two is unbeatable.

You should not put more than 4% of your investable portfolio into any one position. For example, if your portfolio is worth $1 million, $40,000 is your maximum investment in a single position.

Then you apply a 25% stop loss to that position. So if your investment is $40,000, you would sell out of your investment if the stock fell by 25%. That would leave you with $30,000 in cash. But more importantly, your total portfolio would suffer only a $10,000 loss, or 1% of $1 million.

Of course, these numbers are not exact and will depend on market conditions and the size of your portfolio. But you get the gist. You want to limit your total portfolio loss as well as the potential loss in each individual position.

Action Plan: Is it a perfect strategy? There is no such thing. The worst thing that can happen is the stock falls either premarket or postmarket by more than your stop loss or to a number below your stop loss. This will not happen frequently, but it’s possible.

However, you’ll always sleep soundly knowing that, the vast majority of the time, your loss on any single position will ding your overall portfolio by 1% at most. And using a stop loss will force you to become a disciplined investor and prevent you from falling in love with a stock or a story. For more insight on risk, position sizing and how you can limit losses, join me in The War Room today!

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Sell These Stocks If Biden Loses the Election https://investmentu.com/sell-these-stocks-if-biden-loses-the-election/ Fri, 30 Oct 2020 23:00:53 +0000 https://investmentu.com/?p=81144 Prepare for "stockflation."

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Will we know who the next president will be? Perhaps…

The markets could be going nuts like Black Friday at Walmart or staying as calm as a Wisconsin lake in mid-August. We just don’t know, and that is why we’ll be live, analyzing the markets in real time, assessing where to deploy capital and where to pull back from.

If Joe Biden loses, the sector that may suffer the biggest short-term losses could be alternative energy. Companies in the electric vehicle, charging station, and wind and solar energy spaces could all be at risk. Some names include First Solar, Blink Charging and just about any other name with solar in it.

I think the sell-off will be a knee-jerk reaction, however, as the future growth sectors are the very same in which companies like Tesla, General Motors and Ford are investing billions of dollars. So, while they should get hammered, the opportunity to buy may also be the best since March.

Sell the VIX

The market loves certainty and money-printing stimulus, as it forces investors to move into the stock market. That means people will buy stocks and create what we call “stockflation.” Donald Trump measures his success by the level of the stock market, and he will do whatever it takes to make that number look great.

Selling volatility is a weird trade. While you are “selling” volatility, you are actually “buying” stocks or indexes.

So you want to be ready for a massive surge in share prices over the next year. In fact, as you can see from this chart below, the first year of a new presidency is historically the second-strongest for markets.

And when you have a commander in chief who is focused on making the market go higher, it could be a banner year.

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If Trump Wins, Buy These Three Stocks https://investmentu.com/stocks-to-buy-if-trump-wins/ Thu, 22 Oct 2020 23:00:33 +0000 https://investmentu.com/?p=80226 Real-time coverage and real-time picks you can benefit from on Election Day.

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Trump may be lagging in the polls, but that does not automatically count him out…

Incumbents are notoriously hard to beat. And as the election is decided by the electoral college, Trump could still pull out a victory without a majority of the voters supporting him.

That is what happened in 2016. So, if he wins, you will want to have your wish list ready.

There are three stock themes that will work during a Trump presidency: guns, gold and energy.

These three sectors should explode. Let me explain why.

Stocks to Buy if Trump Wins

Guns

You can expect civil unrest to ramp up, as those opposed to Trump and those who are for him will clash more frequently. Those clashes will result in the general population fearing for their safety, despite any empirical data.

Smith & Wesson Brands (Nasdaq: SWBI) is our top pick in this sector. Firearms, accessories and ammunition sales are all moving higher. And that trend will continue during a second Trump administration and possibly even a Biden administration – although expectations are for increased firearms regulations.

For those of you in the “Biden will repeal the Second Amendment” camp, be sure you read up on how difficult (almost impossible) it is to repeal a constitutional amendment regardless of how easy pundits make it sound!

Gold

Deficit spending has soared under Trump, more than in most previous administrations. In fact, the national debt now exceeds our annual GDP for the first time since World War II. There is no reason to believe that this trend will reverse.

The president is not shy about sharing his love for debt, and Congress is not exactly made up of fiscal hawks. The U.S. dollar will suffer, albeit not as quickly as many think.

The entire world is printing money right along with the U.S. But each new dollar printed means the last dollar printed is worth just a little bit less – it’s all about supply.

The best way to counter this trend is with an asset that moves higher when the dollar moves lower, and that asset is gold. Look to gold stocks like Kirkland Lake Gold (NYSE: KL) for exposure to gold from a company that has strong management and even stronger growth prospects.

Energy

This is the lowest-hanging fruit if the current administration stays in power. It will further push the fossil fuel agenda by reducing emission standards and promoting energy self-sufficiency.

That bodes well for the energy sector, which has been decimated by global oversupply and dwindling demand because of COVID-19. This sector is harder to play, so you must stick to an ETF like the Energy Select SectorSPDR Fund (NYSE: XLE).

Action Plan: So there you have it… stocks to buy if Trump wins the election.

If you’d like more investing tips and tricks, consider signing up for or free e-letter, Trade of the Day. It’s packed with useful trading insight.

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Few Traders Do This Correctly https://investmentu.com/hedging-correctly/ Tue, 20 Oct 2020 23:20:10 +0000 https://investmentu.com/?p=79660 Learn how this strategy can save you thousands upon thousands in possible damages - just click the link below...

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Hedging…

Literally every homeowner hedges.

Every auto driver hedges.

But when it comes to the markets, few traders hedge at all.

And even fewer traders hedge correctly.

Today, I outline exactly how to properly hedge – and how it can save you thousands upon thousands in possible damages.

Check it out below…

Youtube Video

P.S. Our strategies make The War Room something unique and profitable. We’ve handed members an insane 76.95% win rate since we launched! Over that time frame, we’ve had a 10% average gain with an average holding period of just over seven days. And this year alone, on average, we’re hitting almost two winning trades every day the markets are open. So what are you waiting for? Join me now and get in on the hottest action in the market!

P.P.S. Want to know what trades Bryan and I believe to be the absolute best? Sit back, relax and watch an engaging video once a week that will give you our top trading pick! We’ll tell you everything you need to know, including when to sell! Stay tuned for the release of our brand-new Trade of the Day Plus service coming soon!

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This Bet Paid Off Big… for YOU! https://investmentu.com/heres-why-draftkings-stock-is-a-constant-winner/ Fri, 25 Sep 2020 23:00:33 +0000 https://investmentu.com/?p=79200 This stock is a constant winner in The War Room for one reason...

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With the NBA finals on fire and the NFL picking back up, DraftKings (Nasdaq: DKNG) is killing it.

Back on July 9, right here in Trade of the Day, I broke down exactly why and how you should build a position in DraftKings.

Here’s what I said…

But there are more blue skies ahead for DraftKings. Right now, the shares are trading lower based on the lack of clarity about when pro sports and the fantasy leagues that accompany them will get in gear. The COVID-19 pandemic is making things much harder to predict. And Wall Street hates uncertainty. However, that uncertainty provides opportunity for you to begin to build a position in DraftKings at current levels and even at lower levels if the shares trade lower. The reason you want to bet on DraftKings is not for what happens today, but for what could happen in the future when the economy finally opens and catches its stride. And this company is sitting on a pile of cash… $450 million, to be exact, with no debt. That gives it the staying power to outlast the pandemic. There are three ways to play this…

1. You can buy the shares trading in the low $30s and plan on making two or three buys at $30, $25 and $20 to average your cost lower if the shares trade down or if there is a correction in the market.

2. You can control the shares with Long-Term Equity Anticipation Securities (LEAPS) options. DraftKings has options going out to 2022 – more than 18 months until expiration. They are expensive, so you may want to use a spread trade.

3. One of my favorite strategies is to use a put sell to try and pick up the shares for a lot less than the current price or get paid for trying.

Regardless of which method Trade of the Day readers chose, they cleaned up!

War Room members also cashed out of a spread for a huge gain.

It’s not the first gain on DraftKings either.

It’s a constant winner in The War Room for one reason… It’s the “BOB” of gambling stocks!

What’s a BOB?

BOB simply means best of breed, a term we use to refer to a company that dominates the space it occupies.

DraftKings went public through a special purpose acquisition company (SPAC) at around $17 per share. It hasn’t looked back, currently trading at more than $53 per share… and in a matter of months. And The War Room has been along for the ride the entire time.

What makes DraftKings the best of breed?

Well, it has cash, and lots of it. More than $1.2 billion on the books. Better still, it’s got zero debt. And the company is signing deals left and right to be the venue of choice for bettors.

Action Plan: Online gambling and fantasy leagues are not going away. And, if people are willing to bet, they can do it on DraftKings’ platform… from the comfort of their couch!

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This Gold Penny Stock Could Score You a 50% to 100% Win https://investmentu.com/gold-penny-stock-opportunity/ Thu, 24 Sep 2020 23:00:10 +0000 https://investmentu.com/?p=79121 These penny gold stocks can pop more than the big guys when the price of gold moves higher. Here's a detailed look at why this is the case...

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If you don’t have any exposure to gold, then the current pullback in gold prices may be your chance to jump in and get some!

Not all gold stocks are alike. Some are strong, established miners like Newmont or Barrick. And here’s a list of some of the top gold stocks in 2020.

Others are, well, a little sketchier…

When gold is cheap, these fringe players don’t make money because their cost per ounce mined is very high. But they can pop more than the big guys when the price of gold moves higher.

These companies can produce outsized returns because they are so cheap to begin with. It’s a gamble, though, with the companies trying to stay in business until gold prices move higher.

Gold Penny Stock to Watch

One such speculation is McEwen Mining (NYSE: MUX).

McEwen Mining has been an interesting gold penny stock to watch

McEwen Mining should be a very successful mining company. It isn’t… yet. But there is still hope.

It’s a microcap with a market cap of just over $400 million that has been profitable in the past. Chairman and CEO Rob McEwen is the largest shareholder. He was the founder of Goldcorp, which he took to a multibillion-dollar valuation before it was taken over by Newmont Mining.

McEwen has had a more difficult time with McEwen Mining, but the tide could be turning. And if it does, we could score a 50% to 100% winner with this one.

It’s speculative, for sure – the low is in the $0.60 range. That is where we would look to exit if the stock revisited those levels.

I will decide at that time based on the reason or lack of reason as to why it traded down to that level. The company is not shy about issuing stock to fund operations – that is a risk. Here is the statement from the most recent earnings call in August…

I very much wish I could say that all our difficulties that started last year are now behind, but they are not, yet. The second quarter was challenging from an operational and health and safety standpoint. Our significantly lower production not only reduced our revenue, but also dramatically increased our costs per ounce. In addition, a change in how we account for development expenditures added significantly to our cash cost per ounce at Black Fox. However, our path to future growth and improved operational performance has become clearer. We are in a transition period setting up for future growth. We have a large resource base, four operating mines and can see an exciting organic growth pipeline of projects ahead that could potentially push our production to 300,000 ounces per year. I recently purchased 2 million shares, increasing my ownership to 82 million shares, and underlining my confidence in our future.

So there you have it – a penny stock mining speculation that could hit it big… and the chief owner is backing it up with a multimillion-dollar share purchase.

To join us, you can sign up for our free Trade of the Day e-letter below. You can then participate in more trades like gold penny stock McEwen Mining in real time!

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My Favorite Market-Beating Strategy https://investmentu.com/my-favorite-market-beating-strategy/ Mon, 14 Sep 2020 23:00:51 +0000 https://investmentu.com/?p=78584 I've traded these successfully for decades.

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Not many traders truly understand how to trade an options spread…

But I’ve traded them – successfully – for decades.

In fact, I consider spreads one of the three core strategies I use to generate income from options.

And today, I break it down for you in the most simplistic way possible.

Check out the full breakdown below…

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This Penny Gold Stock Could Rocket Higher https://investmentu.com/this-penny-gold-stock-could-rocket-higher/ Fri, 11 Sep 2020 23:00:45 +0000 https://investmentu.com/?p=78546 Take a flyer on this gold producer.

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Gold stocks are performing really well across the board…

However, there is an outlier…

In fact, this gold producer is currently trading at the same levels that it was trading in the beginning of the year. Other gold stocks have doubled or even tripled since then.

What makes this story even more surprising is that CEO Rob McEwen was the founder of Goldcorp, one of the biggest gold mining companies on the planet. After its recent merger with Newmont Mining, it was valued in the billions.

McEwen Mining (NYSE: MUX) is currently worth around $500 million, and Rob McEwen is the largest shareholder, owning close to 82 million shares (more than 20% of the company), and he keeps buying shares. Either he’s nuts, or he sees opportunity.

Now, McEwen Mining is trading at lower levels for a reason. The company’s recent net loss is largely due to overspending on advanced projects and exploration.

Here’s what McEwen said in the last earnings call on the subject:

I very much wish I could say that all our difficulties that started last year are now behind, but they are not, yet. The second quarter was challenging from an operational and health and safety standpoint. Our significantly lower production not only reduced our revenue but also dramatically increased our costs per ounce. In addition, a change in how we account for development expenditures added significantly to our cash cost per ounce at Black Fox. However, our path to future growth and improved operational performance has become clearer.

We are in a transition period setting up for future growth. We have a large resource base, four operating mines and can see an exciting organic growth pipeline of projects ahead that could potentially push our production to 300,000 ounces per year. I recently purchased 2 million shares, increasing my ownership to 82 million shares, and underlining my confidence in our future.

P.S. Notice to all Trade of the Day members: Join us on Instagram! Super-awesome news here. Our social media team just launched an Instagram page, and all Trade of the Day members are invited to join. It’s totally free! Just click HERE– then click “Follow.” Bryan and I plan to post charts, videos, and even some funny and entertaining memes every once in a while. It’ll be a great experience and keep us all plugged in together – even while on the go. So please take a moment and follow us now!

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