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The Greatest Investment Trick You’ll Learn

The Greatest Investment Trick You’ll Learn
May 16
10:09 2017

(InvestmentU) – When you’re young, everyone has words of wisdom for you. You’re peppered constantly with suggestions about what to do in school, work, love and every other part of life.

Your predecessors earned thousands of little nuggets through experience… and are eager to pass them on. We all do it.

I regularly offer unsolicited advice to my nieces, nephews and goddaughters.

And I’ve been given gobs of advice over the years. Plenty of it has been good, and an equal amount has been bad. But a handful of these tidbits completely changed my life. And that’s because I was smart enough to realize their value – even if I didn’t fully understand them at the time.

At the top of that list is a gem from my father. One that became the foundation of one of my most successful investment strategies.

Ever since I was young, my father drilled it into my head: “Remember, most companies make money only a few months out of the year… The rest of the time, they’re just trying to keep their heads above water.”

This just rattled around inside my noggin until I started working at my after-school jobs in high school. At age 16, I waited tables at a beer and pizza joint nestled between two ski resorts. During the winter, I made a killing. There was a line out the door every night – we were one of only two restaurants within reasonable driving distance. The orders were easy: a couple pitchers of beer, a couple large pizzas.

We flipped tables all night long and went home with our pockets stuffed with cash.

It was fantastic… at least for a couple months.

And then spring arrived. Ski season ended. Business dried up. Everyone was let go. And the cycle just repeated itself over and over each year.

As I moved into other fields, including oil and natural gas, I realized those words from my father rang true. Companies across almost every industry had similar cycles.

I then learned real-world financial analysis… I learned not to panic, because the markets ultimately head in one direction – up. I learned about business cycles – both long and short – and how they impact a company’s shares.

All of this led to the creation of my Prime System.

In essence, it tracks and targets shares of companies that “make money only a few months out of the year.” Wall Street will tell you that this shouldn’t have an impact on shares… but it does. And even better, the moves are predictable, meaning they can be targeted again and again each year.

Shares of these companies are volatile… but that’s exactly what we want.

Let me show you what I mean…

Believe it or not, we have a “proposal season” in the U.S. This stretches from Thanksgiving to Valentine’s Day every year, overlapping the winter holidays.

Roughly 40% of all marriage proposals will occur during that stretch.

If it ever seemed to you that people are getting engaged at one time of the year, you’re right.

December is by far the most popular month to get engaged.

In fact, Christmas Eve is the No. 1 day for engagements, followed by Christmas Day and then New Year’s Eve.

The average engagement today lasts roughly 14 months. And during that span, couples will shell out an average of $30,000 for their special day.

Of course, after proposal season, we enter wedding season.

The least popular months for weddings are January, February and March. The most popular are June, August, September and October.

The wedding industry is worth $100 billion. And typically, wedding season runs from mid-April all the way through mid-October.

XO Group (NYSE: XOXO) operates a media empire catering to engagements, weddings and pregnancies. This includes websites like The Knot, The Bump and The Nest.

Through these sites, it connects consumers to local retailers to meet all their engagement, wedding and pregnancy needs. So its business model follows that traditional cycle we’d expect. And wedding and birth seasons tend to overlap.

The time of year most babies are born is July through October, with August being the peak.

As you can see, XO Group’s revenue has a telltale “sawtooth pattern,” with the biggest spike occurring in the second quarter…

prime-system-in-season-1

Let me show you a six-month table of XO Group shares since 2010…

prime-system-in-season-2

This is the predictability I’m talking about… the predictability that a lot of what Wall Street says shouldn’t exist.

We clearly see three bad months – and three strong months.

In January, shares have risen only twice since 2010 – in 2011 and 2013. And shares of XO Group have fallen in the month of June only once during that span… And that was in 2011.

You can see that there are very predictable trends, in terms of not just revenue, but also how shares move. In fact, there’s one period to trade shares of XO Group each year for a 31.8% gain.

Prime System trading is so successful because we apply this approach to a broad spectrum of companies. Over the last few years, my subscribers have closed out a total of 41 gains on the same six companies. That’s by just revisiting them year after year.

And already in 2017, we’ve closed out 10 triple-digit profits. Plus, this approach has outperformed the market more than sevenfold since 2013.

To be sure, there are plenty of investors who are skeptical about what I do. Many believe it’s impossible… that efficient market theory would flatten out the volatility.

They think that a trend, while it may exist for a short period of time, will eventually fade away. And they think this because, over and over, they’ve been told that they can’t beat the market – at least not with any consistency.

But why wait two years to bag a 30% gain on a stock when I know – and have proven again and again – that I can get that return in a handful of months?

Thanks to the Prime System, you can too. And it’s all thanks to that chestnut from my father. Remember, most companies make money only a handful of months out of the year.

http://www.investmentu.com/article/detail/54745/prime-system-spot-investment-in-season#.WRsHumjyvIV

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