Traders Daily – Four Essential Rules to Always Follow

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Like most investors, one of your top goals has been to enjoy a financially secure retirement at whatever age you choose.  That being the case, it stands to reason that your retirement “nest egg” should ideally generate above-market returns, often with below-market risk.

But before you rush off to buy a stock, there are rules to understand.

Rule No. 1 – An Educated Investor is a Successful Investor

No one has as much interest as you do in seeing your money grow. Your best strategy is to educate yourself about the investing process, so you can make intelligent decisions. You don’t buy a house without checking it out. Why buy a stock when you know nothing about the company? Becoming educated greatly increases your success. In addition, you have the satisfaction of making your own investment decisions, not relying on someone else.

Rule No. 2 – Be Confident in a Great Company

“Be so confident that you now own a great company that — even if the stock price goes down — you don’t worry and you stay with it until it goes back up, and, ideally, you never sell,” notes CNBC. In short, find a solid company – that even if it does drop or run – you ideally want to hold for the next 10 years or so.

The key main factor affecting the direction of a company’s stock movement is the quality of the company itself. If the company has increased its sales and earnings, the stock usually will move upward regardless of the market. You should spend the majority of your research time analyzing potential investment candidates. 

Rule No. 3 – Don’t Fall Victim to Herd Mentality

A pitfall that catches most investors at one time or another is the greed/fear trap. Greed enters into the picture when an investor has made a nice profit on a stock, but hesitates to take it, believing that it will continue to rise. When the stock price starts to fall, the investor becomes afraid to sell, because he assumes it will go up again. Instead he does nothing, and watches as the stock eventually backs down to, or below, the original purchase price.

Rule No. 4 – Have Patience with Stocks

Far too many of us expect to hit it big with a single stock.  While it can happen, it’s rare.

With small cap stocks, it takes patience to wait for a great stock to move.  But if you’ve uncovered an undiscovered gem with sizable catalysts, hold it.

In short, success is possible.  Just be sure to abide by the rules, and never rush a trade.

Open Positions:

Weight Watchers (WTW) – $51.90

WTW December 21, 2018 55 calls – $2.45

WTW January 18, 2019 55 calls — $3.40

Hold.  We’re looking for a bearish gap refill, near-term.  It pulled back to $50.33.

Square Inc. (SQ) stock – $74.58

The stock now trades at $73.27 after running above $82.  Earnings took the stock down temporarily.  But we still believe this is a solid buy and hold opportunity.

New Age Beverage (NBEV) — $6.76

We have a near-term target of $10.  It last traded at $3.60 a share.  Hold.

Ceragon Networks (CRNT) – $3.90

Boingo Wireless (WIFI) – $32.04

Zayo Group (ZAYO) — $34.42

All are long-term holds as the 5G revolution just begins to pick up momentum.  CRNT now traded at $4.35.  WIFI is now at $25.02.  ZAYO now trades at $23.26.  Hold all.

Kroger (KR) stock – $29.75

KR November 16, 2018 31 calls – 60 cents

KR last traded at $31.40.  Give it some patience.  We have a $35 price target, near-term.

Electronic Arts (EA) stock –$114.40

EA November 16, 2018 120 calls– $3.45

EA November 16, 2018 120 calls (reiterated buy) – $5.85

EA November 16, 2018 125 calls — $3.55

Unfortunately, the calls did not work out as well as we would have liked.  Before Friday, exit the call options, but hold the stock.

Nike Inc. (NKE) — $82.35
NKE January 18, 2019 85 calls — $3.85

Even on the pullback, hold. We have plenty of time on these calls.

Six Flags Entertainment (SIX) — $66.25

SIX last traded at $57.37 and remains on hold.

Twitter (TWTR) stock — $31.90

Hold the stock.  It now sits at $34.08.

CoreCivic (CXW) stock – $25.25

The GEO Group (GEO) stock – $25.32

As long as immigration remains a hot issue, we’ll hold these two stocks.  CXW is now trading at $21.86.  GEO is now up to $21.94.

Glu Mobile (GLUU) stock — $6.55

GLUU now trades at $8.07 and remains a long-term hold with a target of $10.

Parsley Energy (PE) stock – $28.05

PE last traded at $24.47 with a new target of $35.

Nucor Corporation (NUE) — $66

NUE trades at $62.78 and remains a hold with a price target of $68, near-term.

Skechers USA Inc. (SKX) — $29.25

We’re holding the SKX positions with a near-term target of $35. SKX last traded at $28.95.

ETFMG Alternative Harvest ETF (MJ) — $32.30 – exited half

Kush Bottles (KSHB) — $7.85

MedMen Enterprises (MMNFF) — $4.30
Canopy Growth (CGC) — $51.55

Marijuana stocks are will benefit further from U.S. approval across the country, Canadian approval by October 18, 2018, and corporate interest in marijuana stocks, as we’ve seen recently.

Pro Shares Ultra Short S&P 500 (SDS) — $45.15

This remains a hedge against the long positions.  It’s now at $35.91.

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