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2017 was a banner year. The stock market, as measured by the S&P 500 rallied 19.4% year-to-date, and it did so without so much as a hiccup. We're now heading into the ninth year of this bull market, and at 3,219 days and a 300%-plus total return since the market bottomed in March 2009 this is the second-longest and strongest bull market in history. (No. 1 is the bull market of the 1990s, which lasted 4,494 days and returned 582%.)
Here at Maximum Profit, we booked some solid gains and are sitting on many more. And while you'll likely hear the old saying, "A rising tide lifts all boats," we want to be on the boats that are rising faster than the rest. That's the purpose of the Maximum Profit system. So, yes, the large majority of stocks did rise with the overall market in 2017. However, we were able to jump on the ones that were leading the pack.
We booked a 26% gain on Morgan Stanley (NYSE: MS) in just seven months -- more than doubling the S&P's 11% return over the same time frame. Idexx Laboratories (NASDAQ: IDXX) provided us with a nice 39% return in 11 months, versus the market's 14% return.
Of course, we didn't bat a thousand. Overall, however, we managed to keep our losses relatively low -- averaging 9.8% on our losing positions across all of the portfolios.
Cutting losers short is key to becoming a successful long-term investor. Whatever you do, don't rely on hope. Hope is not a strategy. Don't hope for that loser to rebound just so you can break even. And don't let a small loser turn into a big loser. Remember, a 50% loss requires a 100% return just to get back to even.
3 Resolutions For 2018
For many, the New Year brings an opportunity to start fresh. A clean slate.
The motivation to become healthier, get our financial houses in order and read more books really picks up steam. And while you'll likely see plenty of articles on many of these topics from various news outlets, I want to remind you of a few that pertain mostly to your financial house and investing in general.
Resolution No. 1: Realign Your Portfolio
Those big gains you're sitting on have likely taken over a larger portion of your portfolio. As longtime readers know, I'm as much about managing risk as I am about finding big winners.
After all, it's not how much we make, it's how much we keep.
So, it's OK to take some profits off the table while realigning your portfolio to it's original (or updated) allocations. And if you're wondering where to stash your cash while waiting for its next deployment, consider opening a savings account with a FDIC-insured virtual bank. For instance, EverBank and Synchrony Bank both have free savings accounts with rates as a high as 1.31%.
Resolution No. 2: Pay Yourself First
Make it mandatory that the first "bill" you pay is to yourself. You deserve it. Plus, once you add this bill to your budget you will find a way to adjust other expenditures accordingly. Don't tell yourself that you'll stash a couple hundred away each month... it likely won't happen as you'll find some excuse to use that money elsewhere.
Instead, be sure to set up an automatic deposit -- or if you haven't already, be sure to set up an automatic deduction from your paycheck. This will help keep you accountable.
If you're already contributing to your retirement and have automatic deposits set up into your emergency fund, then take the next step and increase your contributions. You'll be amazed at how quickly you'll adapt to a slightly smaller paycheck.
Resolution No. 3: Keep Your Emotions And Expectations In Check
Last, but certainly not least, I want to touch on emotions and expectations. It's been a great year in the stock market; the S&P 500 is up 19% this year. Don't expect the market to necessarily post another double-digit gain in 2018. Remember, historically the market averages about 7% a year.
With investing -- and many things in life -- it's all about managing expectations. If you expect the market to rally another 19% next year, then you're likely setting yourself up for disappointment. Also, if you set the bar that high, you begin to take larger risks to try to hit this "goal" of 19%. Don't let your emotions dictate your investing. If you do, it usually ends poorly.
Also, if you've had an exceptional year where you've made lots of money, don't let it go to your head. Stay focused and disciplined. Keep your emotions out of investing.
Looking at 2018, I expect some volatility to return. But part of the beauty of the Maximum Profit system is its ability to help keep emotions at bay. Regardless of what the future might have in store for us, the Maximum Profit system will help us navigate whatever the market throws at us.
As we head into the new year and you begin thinking about how you want to attack 2018, keep these ideas in mind. Financial changes don't need to be difficult. Keep things simple and follow some of these guidelines to help set you up for a successful new year.
Here's to a safe and prosperous 2018.
P.S. I strongly recommend you give my premium service, Maximum Profit, a risk-free trial. That way, you'll have a winning system that uses proven fundamental and technical indicators working for you. You'll no longer have to worry about what to buy, when to buy -- or when to sell. Simply let Maximum Profit do the work for you. To learn more, simply follow this link.
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