The huge gains that can come when you get in early and exercise patience
What’s the difference between a $1,000 stock-investment that turns into $46,800, and a $1,000 investment in the very same stock that turns into $1,170,000?
In the situation we’re about to discuss, the answer is “timing and patience.”
On April 30, 1986, Microsoft traded at $0.10 per share (post-split price). Of course, at that time, the fledgling company was unproven and unnoticed.
Seven years later, Fortune magazine named Microsoft “Most Innovative Company Operating in the U.S.” At that time, the stock price was still just $2.50.
As I write, Microsoft is trading around $117. So, that $2.50 price would have still been an incredible entry point, right? Absolutely — and as I wrote just a moment ago, it would have turned a meager $1,000 investment into nearly $47,000 today.
But those returns appear far less spectacular when compared to that $0.10 entry price from seven years earlier — the one which would have turned $1,000 into nearly $1,200,000.
That’s the power of getting in ahead of the masses and then simply giving an investment time to play out.
I’m telling you this because it relates to the topic Luis and I have been writing about this week in the Digest — Matt McCall’s “Jumper Stocks” system.
In Wednesday’s Digest, I introduced readers to this strategy. In short, thanks to the easing of federal and state laws, more legal marijuana stocks will be able to “jump” to major U.S. exchanges. It’s like going from the minor leagues to the majors. This is will not only allow more individual investors to buy marijuana stocks, but it will also allow the multi-trillion-dollar mutual fund industry to buy them as well.
In yesterday’s Digest, Luis explained what Matt looks for in a potential Jumper Stock. You see, you can’t buy just any marijuana stock and expect life-changing returns. Matt has very specific criteria for picking his Jumper stocks, which Luis detailed.
Today, I’m going to close out our series by discussing an often-overlooked part of making huge returns with Jumper Stocks. It’s a responsibility that you have as an investor. It’s not complicated … but that doesn’t mean it’s easy.
But when conditions are right and you handle this responsibility well, the investment outcomes can be spectacular.
So, in today’s Digest, let’s dig into it and set some expectations so that your Jumper Stock investments will hopefully turn out more like the $1,170,000 Microsoft investment.
***What it takes to generate massive investment wealth
Matt has graciously been letting us excerpt from his premium Early Stage Investor content this week. In this newsletter, Matt combines the massive trends that are reshaping our world and investment markets, with smaller, “off-the-radar” stocks that have the potential to explode in value as investors wake up to their potential.
I’m going to let Matt set the stage at this point:
Our mission in Early Stage Investor is to identify giant, world-changing mega-trends and stake our positions before the masses have found out about them. As early investors in the internet and smartphones can tell you, the rewards for seeing what’s around the corner and acting boldly can be enormous.
That’s the first key to making life-changing profits in the stock market: investing in long-term mega-trends. The earlier we get in on these trends, the bigger the upside potential in our investments.
The second key? Holding on to them.
The only downside to this strategy is that it can require patience. Sometimes a lot of patience.
The biggest and most profitable investing mega-trends of the last 50 years took more than a decade to play out. Think of the internet boom. It began in the late 1980s when “internet” was anything but a household term.
It’s at this point in Matt’s issue that he uses Microsoft as an example. He touches on the difference in returns an investor would have experienced based on different entry points, and then holding on for the long haul.
***The challenge is, as humans, you and I aren’t wired to invest this way
But patience is critical — and that’s our responsibility.
I’ve written about this behavioral challenge before. From our March 18 Digest:
When one of your stocks hits a new high, what emotion do you feel?
I’d guess that your initial reaction is pride. You feel good about picking a winner …
But I’d guess that before long, a different emotion may creep in — uncertainty. You may begin hearing that voice that starts doubting and asking questions …
“It’s great that this stock is hitting new highs, but does that mean I should sell now? Maybe sell at least some to lock in these gains? If we’re at a new 52-week high, doesn’t a pullback from this level seem probable? I don’t want to watch my gains disappear.”
Some years ago, the American Psychological Association studied this dynamic.
The findings didn’t bode well for us. From that study:
“Investors across personality types and demographics have a tendency to sell gaining stocks too early and hold on to losing stocks too long, according to research presented at APA’s 2005 Annual Convention by Bernardo J. Carducci, PhD, a psychology professor at Indiana University Southeast. Moreover, the effect is most pronounced in more educated people.”
***But if you want life-changing returns, it’s critical you master your emotions and be patient
On that note, I’m going to turn back to Matt:
Today is a very interesting time in the market. It has been ten years since the bottom of the 2008-2009 financial crisis. But human nature creates a sense of unease. When things are good for a long period of time, we tend to fear the end rather than enjoy the present. This emotional way of thinking is why so many investors lose money in the stock market. But that will not be us.
Matt goes on to discuss today’s current market, as well as fears that the bull we’ve enjoyed for a decade is coming to an end.
But this just points back to our responsibility for patience. It’s easier to hang in there when times are good and stocks are climbing … harder when your investment has just doubled and you want to protect your gains as the financial media talks of a looming market downturn … and harder still when market conditions actually turn and your stock begins heading south. But Matt addresses that challenge directly:
I know it can be difficult to hold stocks through downturns, but just as Microsoft pulled back 50%+ several times on its way to becoming one of the largest companies in the world, it is likely that some of our early-stage companies will follow a similar path.
All great companies have suffered at the hands of a market-wide bear market. Amazon is a perfect example of that — a market leader that withstood major sell-offs on its way to changing retail forever. It experienced numerous bear markets over the years and a few times even lost more than half of its value in a very short period of time. But through it all, Amazon changed the lives of the investors who got in early, ignored the noise, and concentrated on the company — not the market.
***In light of all of this, what would you do in the following situation?
On February 20, Matt introduced Jumper Stocks to his Early Stage Investor readers. As part of it, he recommended one new jumper stock to his portfolio. It’s a Toronto-based cannabis producer.
As I write, this stock has soared nearly 65% in just a month and a half. Sounds great, right?
But here’s the thing. At one point in the last few weeks, this stock was up over 100%.
So, what would you do? Let’s say you acted on Matt’s advice, bought this stock and watched it double your money practically overnight … but then experience a major pullback.
Would it create fear? Would you want to sell?
I’m aware of my own challenges as an investor. I know that seeing a 100% gain pull back to “just” a 65% gain would result in me feeling a strong temptation to sell. After all, depending on my investment amount, 65% gains could pay for a month of rent or mortgage, or a great vacation, perhaps a new car, or even far more.
But as Matt has pointed out, investors who sell early could potentially be shortchanging themselves — trading short-term impressive gains for long-term term exponential wealth.
Coming full circle, we have timing and patience …
Timing is Matt’s job — getting subscribers into the right stocks before the masses know about them. But patience? That’s up to us. So, let’s hope we can all master the emotional control required to watch a 100% gain pull back to a 65% gain … so that we’re able to enjoy what could be life-changing returns in the years to come.
If you’d like to learn more about Matt’s Jumper Stock system, and get his free stock pick which he believes could skyrocket 1,000%, you can watch a free video here.
Have a good evening,
Jeff Remsburg
