Here we go! All previous tips lead up to this. As mentioned in the last tip, Stockpiling is the #1 most powerful investment strategy. This is the strategy that turns every day investors into millionaires and millionaires into multi-millionaires.
Am I promising that Tykr will make you a millionaire? No. But stockpiling will help you build wealth faster.
Here is one of my favorite quotes from Phil Town.
“If the stock goes up, we make money but if the stock goes down, we get rich.”
Buying more shares as the stock goes down, lowers your adjusted cost per share. This means, that when the stock rises again, you make massive returns.
Here is how you stockpile…
1) Watch the market
When I notice the market falling I get very excited. Now keep in mind, we cannot time the very bottom. No software platform or human can predict the bottom so what you do is “Buy into the dip.”
2) With On Sale stocks, I buy every 10% down
As my On Sale stocks fall every 10%, I buy more. In an earlier investing tip, I talked about keeping 50% of your funds in cash. That 50% is reserved for times like this. You use that 50% to Stockpile. Don’t over-complicate the concept of “Buy into the dip.” If it’s 5%, 6%, or 7%, that’s fine. Just keep buying a little more as the stock keeps falling.
3) With Watch stocks, I hold.
As my watch stocks go down, I hold and wait for the stock to go back up. I may buy more Watch stocks if the 4M score is close to 80 or higher.
4) With Overpriced stocks, I hold
When the market goes down, I don’t sell any stocks for a loss. I always remember Rule #1 Investing. I hold Overpriced stocks and let them go back up when the market corrects and when the share price is higher than the cost basis, I will sell.
5) Wait for the big returns!
Here are a few examples…
During the Great Recession of 2008, the market went down by 38%. In 2009 the market went up by 24%. If you had bought On Sale stocks in 2008, you could have made over 100% returns that year with a few On Sale stocks.
During the Covid dip of 2020 (February and Market of 2020), the market went down by 30%. In 2020 the market went up by 16%. If you had bought On Sale stocks during the Covid dip, you could have made over 100% returns that year with a few On Sale stocks. That year, my portfolio was up 120%.
Pullbacks in the market don’t happen often. You should be prepared with cash on hand to buy On Sale stocks as they drop. Taking advantage of opportunities like this can pay off big time.
Note: The returns listed above are not a guarantee of future performance.