| Exactly What I Want to See in a Trade, Part II | | By Dr. Steve Sjuggerud | | Tuesday, October 4, 2016 |
| I'm glad you want to hear more about finding good ideas…
Yesterday, I shared an example of how I size up a potentially profitable opportunity.
Readers wanted more… So let's take a look at another investing idea today…
----------Recommended Link---------
 | Midnight Tonight: Last Call for Our Newest Research
People all over the country have signed up to receive Dr. Steve Sjuggerud's brand new model portfolio. Steve believes this is the best way to make five times your money over the next few years. Best of all it doesn't involve options, bonds, or tiny stocks. We're offering all charter subscribers a huge discount. But only until midnight tonight. Click here to learn more. |
|---|
---------------------------------
You probably know by now that I look for three things in an investment – I want to see an investment that's 1) cheap, 2) hated, and 3) in the start of an uptrend.
The investing idea we're looking at today is cheap… It's down about 85% since 2007 (from around $140 to around $20). Take a look…
After an 85% crash, you can imagine that this investment is also extremely hated by investors… And this hate is what gets me interested.
You see, if you want to make triple-digit returns, you can't buy what everyone already loves… The biggest gains happen when things go from "bad" to "less bad."
And in today's example, things are BAD…
"It has never been a worse time," a CEO in this industry said in a Reuters news story this week. "At the moment, nobody feels the need to buy and the price is lower every day," he continued.
He's right… Over the last year alone, the price of this investment has fallen 42%…
So this idea is clearly cheap and hated. But is it in an uptrend?
Obviously not. It's hitting new lows every day.
This idea ticks the first two boxes. But because we don't have an uptrend, the idea simply goes on the "watch list." It'll be a trade someday… but not today.
What is this idea? It is uranium.
Legendary resource investor Rick Rule made the long-term case for uranium at our Stansberry Conference in Las Vegas two weeks ago. He said…
Uranium… You make the stuff at $65 a pound, and you sell it for $25 a pound. That means you lose $40 a pound, and you do that 190 million times a year.
So… how many people here believe we're going to have electricity in six or seven years? [Most hands go up.] That means you believe that the price of uranium – the stuff you make electricity out of – goes up. No second choice. |
|
That's the long-term story. But the short-term story is crazy…
You would think that if you're losing $40 for every pound you produce, you would cut back production. But the opposite has happened… thanks to Kazakhstan. Quoting Reuters…
Despite the plunge in uranium prices after the 2008 financial crisis and again after Fukushima, uranium production has doubled from 80-90 million pounds in the mid-1990s to about 160 million pounds last year, according to Energy Fuels data.
Most of that new supply came from Kazakhstan, which over the past decade has more than quintupled its output to become the world's leading source of uranium with a 38% market share… |
|
In short, "At today's prices, [the uranium] industry is not sustainable," another industry executive told Reuters. (You can read the full story here.)
Uranium is incredibly cheap and incredibly hated. There's a great long-term case for it, as Rick Rule explained. But in the short run, things can get worse before they get better.
In the meantime, I will watch for the uptrend – the price action – to confirm this idea before any data in the market will confirm it. That's why it's so important.
After an 85% fall since 2007 and a 42% fall in the last year alone, we are not there yet. There is no uptrend in sight.
Today's essay wasn't about uranium, though. It's not about giving you a fish… It's about teaching you how to fish…
It's about showing you how I look for an idea… the thought process I use to decide when to enter a trade.
I hope you can use this thinking to know when to enter a trade… and when to stay on the sidelines.
Good investing,
Steve |
Further Reading:
Yesterday, Steve walked readers through his first example outlining exactly what he looks for in a trading opportunity. "Within two minutes, I knew everything I needed to know," he said. For more details on how to quickly size up an investment idea, read his essay here: Exactly What I Want to See in a Trade. If you're developing your thought process on how to invest, there's a simple way to avoid making expensive mistakes. Just ask yourself these three questions before you buy... and keep your emotions from leading you into the worst investment pitfalls out here. Learn more here. |
|
THE POWER OF INVESTING IN ADDICTIVE PRODUCTS
Some people call it "investing in vice." We simply call it smart investing... Selling addictive products is a great business. Customers keep coming back for more... So companies that sell cigarettes, sugar, and caffeine enjoy steady sales and profits. This often makes for excellent long-term investments. For proof, we turn to Dunkin' Brands Group (DNKN). The coffee and donut giant has more than 11,500 Dunkin' Donuts locations in nearly 60 countries. It also owns and operates the Baskin-Robbins ice cream brand. Few things are as addictive as caffeine and sugar. Last week, DNKN shares touched a new 52-week high. They're up more than 22% from their June lows – and more than 26% this year. As long as people continue to drink their morning coffee, DNKN shares should continue to rise... |
| 
| This developed market fits our criteria perfectly... We love opportunities that are cheap, hated, and in an uptrend. And one developed market fits all three criteria today... |
Are You a
New Subscriber?
If you have recently subscribed to a Stansberry Research publication and are unsure about why you are receiving the DailyWealth (or any of our other free e-letters), click here for a full explanation... |
|
Advertisement
And get The Mining Stock Guide: The Best Gold Speculations in the Market Today, free of charge, with the full details on the best small gold-stock opportunities right now – and learn why now is the absolute best time to buy. It's by far the easiest way to get in on the coming gold boom. Learn more here. |
| Exactly What I Want to See in a Trade | | By Dr. Steve Sjuggerud | | Monday, October 3, 2016 |
| | "What do you look for in a trade?" It was one of the questions people asked me the most at our Stansberry Conference... |
| | The Only Advantage You'll Ever Get in the Financial Markets | | By Dan Ferris | | Friday, September 30, 2016 |
| | Forget about the advantages you can't get. Instead, focus on the one that's readily available to all investors... |
| | Five Essential Steps to Prepare for the Next Bear Market | | By Alex Green | | Thursday, September 29, 2016 |
| | Are you prepared for the next downturn? You should be. But you should also be prepared to participate in this bull market as long as it continues. |
| | How to Become a Millionaire Using Other People's Money | | By Chris Mayer | | Wednesday, September 28, 2016 |
| | This story shows how everyday people can make a lot of money in stocks by doing some relatively ordinary things... |
| | Your Biggest Question, Answered | | By Dr. Steve Sjuggerud | | Tuesday, September 27, 2016 |
| | Steve spoke with hundreds of subscribers at our Stansberry Conference in Las Vegas last week... The most common question was some variation of: "When does it all end?" |
|
|
|
|
