| Because markets are efficient it is hard to | | | | a lot of research. Look for cash, real estate on |
| impossible pick stocks to get ahead of indexes | | | | balance sheet. Very important is long-term |
| over long term. Luckily you have better choices. | | | | predictable growth (growth even better then |
| Here are two strategies for higher consistent | | | | hypergrowth, because it is hard to predict when |
| returns and less risk. These are also opportunities | | | | hypergrowth phase stops). One of the most |
| for index beating returns. And high absolute | | | | important factors is management. Best picks may |
| returns which can reach 30% and above if you | | | | and should include companies run or owned by |
| use margin and have or gain experience. | | | | best managers or money managers. I mean |
| You can have high absolute returns with a lot of | | | | Sears Holdings (SHLD) which is run by billionaire |
| stability by buying bond and stock closed end | | | | hedge fund manager Eddie Lampert. Eddie |
| funds with discount. | | | | Lampert is one of the best and highly respected |
| Closed end fund is like mutual fund. The difference | | | | money mangers in USA. Some people call him |
| is that closed end fund have limited number of | | | | modern Warren Buffett. |
| shares. And they can sell for less or more than | | | | He took about 5 managerial responsibilities at |
| sum of underlying securities. | | | | Sears Holdings. And besides being one of the very |
| Buy fixed income closed end funds with discount. | | | | best money managers he is famous for |
| You can go to and search by discount. The more | | | | successful retail turnaround stories. |
| advanced strategy is to frequently trade the | | | | Second example for stock selection is Hewlett |
| closed end funds and hedge them with options on | | | | Packard with Mark Hurd as CEO. Look at the |
| Treasuries ETFs. This government bond exchange | | | | outstanding job Mark Hurd did at his previous |
| traded funds have ticker symbols TLT, IEF and | | | | company - NCR Corp. |
| SHY. Frequent trading can capture short-term | | | | Of course one of the most important things is to |
| fluctuations and significantly improve overall | | | | buy companies with good valuation. |
| results. If you trade, you might pay attention to | | | | Don't chase good stories, good products, good |
| shorter duration funds - not just to discount. | | | | prospects and even brilliant managers without |
| Closed end funds with average maturates up to 5 | | | | regard for stock valuation. |
| years are more predictable from my experience | | | | With experience you can add turnaround stories |
| and therefore easier to trade. | | | | to you portfolio, but make sure to thoroughly |
| Second opportunity is about selling stock puts. | | | | researching this opportunities. You can sell much |
| You act as mini insurance company by selling | | | | more expensive insurance (expensive puts) in this |
| insurance (puts) that stock will not be 20-30% | | | | situations. |
| lower 0.5 - 2.5 years from the initial transaction. | | | | By employing this two strategies outlined above |
| Select the put expiration date as far as possible. | | | | you can create balanced portfolio with exposure |
| Stocks with LEAPS - options expiring up to 2.5 | | | | to stocks and fixed income. Both strategies |
| years in the future are preferable. | | | | results to buying securities with discount. With |
| Approach picking stocks for selling puts like you | | | | selling puts you also have benefit of leverage |
| buy a business or invest for very long term. I | | | | because you need to put up in margin 10%-20% |
| consider this strategy as investing - not trading. | | | | of underlying securities. |
| At least from underlying stock selection | | | | I feel that both strategies might be part of any |
| perspective. Pick companies you, independent | | | | size portfolio and might be suitable for investors |
| financial publications and/or trusted advisors made | | | | with lower than average risk tolerance. |