{"id":20051,"date":"2011-03-12T06:45:04","date_gmt":"2011-03-12T11:45:04","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=20051"},"modified":"2011-03-12T06:45:04","modified_gmt":"2011-03-12T11:45:04","slug":"theres-always-a-growth-story-somewhere","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/03\/12\/theres-always-a-growth-story-somewhere\/","title":{"rendered":"There’s Always a Growth Story Somewhere"},"content":{"rendered":"

By Zachary Scheidt, Editor, Taipan\u2019s New Growth Investor and Velocity Trader, taipanpublishinggroup.com<\/strong><\/span><\/a><\/p>\n

Note from Editor Sara Nunnally:<\/strong> Yesterday, Jared gave you some indicators to watch out for if the market’s about to drop<\/a>. Today, I want to share with you an article from Zachary Scheidt that talks about what to do if a position or market does happen to turn against you, with a real-life example from Taipan’s New Growth Investor<\/em>.<\/p>\n

In short, there’s always a growth story out there somewhere…<\/p>\n

Here’s Zach’s article.<\/p>\n

Cutting Risk and Sticking With Our Bullish Growth Trends<\/h3>\n

Earnings season is always an interesting time for us as New Growth Investors<\/em>. Each quarter we get the chance to review the growth prospects for each of our companies, and determine whether holding the position still makes sense.<\/p>\n

At times, these earnings reports can be very exciting… I always like to hear about my companies growing revenue, introducing new products, entering new markets<\/a> and basically expanding their business. That’s what New Growth<\/em> is all about, and it’s very rewarding (both intellectually and financially) when our ideas pan out.<\/p>\n

Other times, earnings season can give us reason to pause and reconsider our positions. Every time I recommend a new position, I expect to be able to generate a 100% return or more — within the next six to 18 months. But markets continually shift and sometimes growth stories run into new challenges.<\/p>\n

When this happens, it’s best to cut our position and look for new ideas. After all, there are so many great growth stories in play, it doesn’t make sense to tie up our capital in a situation that isn’t working out well — when we could be invested in a much more dynamic opportunity.<\/p>\n

The very best investors in the world (both professional as well as individual) almost always have one character trait in common: They let their winners continue to run, while they cut their losers out with minimal damage.<\/p>\n

Today, we’re going to look at two of our positions — one that is continuing to exhibit New Growth<\/em> characteristics, and one that has run into some challenges. Cutting our losing or breakeven trades, while letting the strong positions continue to trend higher, will keep us compounding our profits, with risk firmly in check.<\/p>\n

(By the way, investing doesn’t have to be complicated. Sign up for <\/em>Smart Investing Daily and let editors Jared Levy and Sara Nunnally simplify the stock market for you with their easy-to-understand investment articles<\/a>.)<\/em><\/p>\n

AIG Casts a Shadow on Municipal Bonds<\/h3>\n

This week the mega-insurer AIG announced “true” earnings for the first time in about two years. You’ll recall the complete mess when the insurance company got in over its head, guaranteeing “safe” mortgage securities on an incredibly leveraged basis.<\/p>\n

AIG had to be bailed out by Uncle Sam (more accurately by you and me — the taxpayers) and has only recently begun to look like a real company instead of a propped-up government entity.<\/p>\n

Our New Growth<\/em> investment Assured Guaranty (AGO:NYSE<\/a>)<\/strong> is in a similar business to AIG. AGO guarantees financial securities, with a focus on municipal bonds. In other words, if a municipality is unable to make payment on their bonds, AGO is contractually obligated to step in and make the investors whole. For this service, AGO receives a premium (or fee) and if the statisticians do their job right, the fees should outweigh the insurance payments over time.<\/p>\n

Originally I liked AGO because it steered clear of the risky mortgage market and focused on more stable municipal bonds. But as you know, the municipal bond market has had its own set of challenges over the past several quarters. This week, AIG pointed to the municipal bond market as one of the major risks for the coming year — a statement that will likely cause investors to think twice about AGO.<\/p>\n

Without going into too much detail, I’ll tell you that I don’t think the municipal market will capsize AGO<\/a>. The management team has strong risk controls in place, and plenty of capital to absorb potential losses.<\/p>\n

But sometimes the investment game is more about perception than reality. Think about it… If mutual fund managers and hedge fund traders view AGO as “very risky,” they won’t buy the stock based on this perception. Without these buyers supporting the stock, AGO could continue to trade at its current level for months — until something happens to make investors realize the risk is contained.<\/p>\n

I don’t want to wait six months for this to happen…<\/p>\n

We have too many great New Growth<\/em> opportunities in the pipeline to keep our capital tied up in a stock that is range-bound. So today, we’re going to kick out AGO and focus on the growth opportunities that are more likely to show us profits over the next several months.<\/p>\n

Editor’s Note:<\/strong> Zach’s advice about letting go of losing stocks may be emotionally hard to do, but it will make your portfolio stronger — and you a better investor. But this wasn’t all that Zach had to say in his article. He unveiled his latest research in a hot Latin American sector in his New Growth Investor<\/em> article from Feb. 25, 2011.<\/p>\n

New Growth Investor<\/em> subscribers can access the full article online now, and those interested in learning more about Zach’s service in this investment report<\/a>.<\/p>\n

About the Author<\/strong><\/span><\/p>\n

Zach Scheidt is the Editor of Taipan’s New Growth Investor<\/a><\/em> and Velocity Trader<\/a><\/em>, two of Taipan Publishing Group’s financial research investment newsletters. Zach’s experience as a hedge fund manager has given him the skills to manage sizeable investments of a number of private investment partners and develop advanced investment strategies to make the highest returns possible.<\/p>\n

For Taipan’s New Growth Investor<\/em>, Zach researches and profiles innovative new companies capable of creating long-term wealth regardless of the state of the stock market. He focuses on high-yield dividend stocks and provides simple long-term investment strategies. For Velocity Trader<\/em>, Zach carefully scans thousands of stocks, looking for companies that have the potential to make huge stock price moves. He then uses option trading strategies to identify short-term investment opportunities for significant gains.<\/p>\n","protected":false},"excerpt":{"rendered":"

Earnings season is always an interesting time for us as New Growth Investors. Each quarter we get the chance to review the growth prospects for each of our companies, and determine whether holding the position still makes sense…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-20051","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/20051","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=20051"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/20051\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=20051"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=20051"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=20051"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}