The Proven Trading Strategy For Tariff Chaos
Posted by Jeff Yastine | May 14, 2019 | Global Economy, Sovereign Investor Daily, Trading Strategies
Want a way to find the stocks that will lead the market out of its current chaos, tariffs or no tariffs?
Find a problem. The bigger, the better.
Then find the company or industry that’s attempting to solve that problem.
Plastic recycling is a good example.
Last week researchers announced the development of a breakthrough plastic compound dubbed PDK (short for its chemical compound name, polydiketoenamine).
PDK is supposed to be “endlessly recyclable.” If that’s accurate, as published reports claim, it’s a huge development worth paying attention to.
The same can’t be said of today’s grades of plastic. Take a plastic water bottle, for example.
It can be recycled, of course. You can melt it down, dissolve it in chemicals, compress it or shred it. But each time its structural or molecular properties change.
So how does PDK help us pick winning stocks?
TOMORROW’S MARKET LEADERS
Lab projects often take years before they’re turned into products that businesses can sell (if they ever make it out of the lab at all). I have no idea if PDK is one of them.
But it points toward the kind of “big problem, powerful solution” that identifies tomorrow’s market leaders.
Google was that kind of company in its early days. Anyone who used the search engines of the 1990s, with names such as AltaVista and Dogpile, knows just how inadequate they were. Google found a better way.
So did Walmart. When it went public in 1972, it was just another obscure retailer. Sears, the dominant retailer of that era, was putting the finishing touches on its namesake tower, the world’s tallest skyscraper at that time, in downtown Chicago.
The big problem for consumers in the 1970s was high inflation. Sam Walton’s company had a solution unlike any of its competitors. The rest is history.
FINDING BIG WINNERS IN THE STOCK MARKET
Not every stock in my Total Wealth Insider portfolio fits this description.
Some are just great stocks temporarily mispriced by the market. But others that do fit this description have often been huge winners.
A good example is in cybersecurity. Hacking for theft of data is rampant all over the globe, 24 hours a day.
Companies that have a strong solution and good management to execute the business model make their shareholders rich. That’s how we reaped a 103% profit on shares of Rapid7 Inc. (Nasdaq: RPD) when I closed out that trade a while back.
The point is … keep identifying a big problem somewhere — and start looking for companies with powerful solutions to solve it.
Chances are you’ll be on your way to finding a big winner in the stock market.
Jeff L. Yastine
Editor, Total Wealth Insider