{"id":22221,"date":"2024-10-16T07:30:57","date_gmt":"2024-10-16T11:30:57","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=22221"},"modified":"2024-10-16T07:30:57","modified_gmt":"2024-10-16T11:30:57","slug":"trading-against-the-conventional-wisdom","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/trading-against-the-conventional-wisdom\/","title":{"rendered":"Trading Against the Conventional Wisdom"},"content":{"rendered":"

Managing Editor’s Note:<\/strong> Today, we’re sharing some wisdom from our friend, expert trader Larry Benedict.<\/p>\n

\n

Wall Street is full of all kinds of advice…<\/p>\n

For example, many experts recommend diversifying your portfolio.<\/p>\n

This could mean buying a gold ETF… maybe some tech stocks… exposure to utilities, industrials, and energy… and perhaps a few consumer staples stocks to round it all off.<\/p>\n

But I recommend going against this conventional wisdom…<\/p>\n

Because that has been one of the keys to my success over the past 40 years.<\/p>\n

Let me explain why…<\/p>\n

Diversification Has a Downside<\/h2>\n

Wall Street tells you to diversify to prevent a big drop in one stock from causing a catastrophic hit to your account.<\/p>\n

That’s true enough. There’s a reason for the idiom: “Don’t put all your eggs in one basket.”<\/p>\n

Yet if you do diversify, one of your stocks can shoot up… but it won’t improve your overall results much, since it will just be a small percent of your holdings.<\/p>\n

Over time, a broad portfolio can still bring a meaningful return… but most people aren’t going to achieve wealth this way in less than a couple of decades at best.<\/p>\n

And that’s not the only downside…Once you have this range of investments… how do you keep track of it all?<\/p>\n

If you have 20, 30, or 40 things in your portfolio, for example, there just isn’t enough time in the day to pay attention to each one’s performance.<\/p>\n

And that’s before you consider all the economic news and earnings reports you need to keep tabs on as well.<\/p>\n

That’s why I see a better way…<\/p>\n

My Favorite Tool<\/h2>\n

I’ve made trading the focus of my career. And for traders, specialization<\/em> – not diversification – is critical.<\/p>\n

In the markets, that means choosing a “theme.” This can be a single stock or a sector ETF. Or it could even be an index like the S&P 500 or Nasdaq-100.<\/p>\n

Instead of splitting your attention among a dozen or more assets, you should dig deep into your choice. Learn all about that stock, and follow it closely as you trade it.<\/p>\n

Then once you’ve traded that theme for all its worth, you can go on to the next one showing opportunity.<\/p>\n

Focusing on one theme at a time led to my hedge fund being ranked in the top 1% by Barron’s<\/em> multiple times.<\/p>\n

And it has meant huge wins for my followers at The Opportunistic Trader.<\/em><\/p>\n

That’s because we combine this specialization with my favorite trading tool: options.<\/p>\n

Now, Wall Street likes to tell retail customers that options are risky.<\/p>\n

But when you know how to use them properly, they can supercharge your returns – while allowing you to control your risk.<\/p>\n

For example, in six days, my One Ticker Trader<\/em> readers were able to bring in a 100% gain using options earlier this year.<\/p>\n

Then, in just over two weeks, we saw a 69% gain. After that, we made a 127% win in nine days.<\/p>\n

And going into each trade, we knew the exact dollar amount we were putting at risk.<\/p>\n

That’s how we can build meaningful returns in a much shorter time.<\/p>\n

While we don’t win every time, the wins we see – and the speed with which we achieve them – can make a big difference to your bottom line.<\/p>\n

Regards,<\/p>\n

Larry Benedict
Editor, Trading With Larry Benedict<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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