|
Published: November 11, 2010
For those that don't know, in addition to
being the Chief Strategist behind
StreetAuthority's Stock of the Month newsletter, I'm
also an avid poker player.
I first picked up poker about a decade ago, well before it was
all over television. But I wasn't after the big jackpot like
most of the people who've taken up the game. I simply thought
poker could make me a better investor. Poker has a lot in common
with investing -- and no, I'm not talking about luck.
In poker, you get only one move at a time. You don't get the
luxury of making your moves in a vacuum or without consideration
for the dynamics other players bring to the game. It also takes
patience and foresight to win consistently. And sometimes, it's
not about winning, but simply knowing when to cut your losses.
When put in those terms, it's easy to see how playing poker can
make you a better investor.
Truth is, I count on my experience and skill at the table for my
strategy in
Stock of the Month. I only select one pick each month to
invest in -- it's crucial I make the right call. With a $100,000
real-money portfolio (yes, I buy my recommendations with actual
cash), I'm not playing a theoretical game either -- this is real
money and my picks have real implications.
Fortunately, losing money has been something I haven't had to
worry about; my background and simple, focused strategy is
paying off.
A perfect example is a call I made earlier in 2010 as I
anticipated a weaker dollar, growing commodities demand and a
rebound in strong, well-managed emerging market countries.
With that combination, one of the countries that quickly came to
mind was Chile. Industrial commodities were being consumed at an
enormous rate by China and India. As the West came back online,
they would soon start to feed their hunger for raw materials
again. Plus, the Chilean economy was in very good shape and
stood to benefit from all the trends I was anticipating during
the year. So I did my
due diligence and found a great fund to
access the country.
Each time I put in my buy order, I get a little shot of
adrenaline -- not unlike making a call at the poker table. But
my research and patience has paid off handsomely. Since making
the purchase back in February, my holding in the iShares MSCI
Chile Investment Market Index Fund (NYSE: ECH) is up almost
+40%.
Certainly at this point the fund has seen quite a run for my
readers fortunate enough to have taken the ride. While I believe
there may still be some profits left, I'm honestly more excited
about some of my more recent additions to the portfolio.
Action to Take --> In poker, there is an expression for playing
a starting hand with the highest probability of winning. It's
called "getting your money in good." My goal is to "get my money
in good" with stock picks like ECH every month. So far, the odds
have been in my favor. On each of my 11 closed positions, I've
averaged a total return of +31.1%.
But I've learned the best poker players -- and investors --
don't spend their time thinking about the hands they've already
won. They are always keeping their eyes open for the next hand
to play.
-- Amy Calistri
Editor
Stock of the Month
The Daily Paycheck
P.S. -- If you want to take a look at my closed Stock
of the Month trades,
be sure to read this memo. You'll find all my closed
positions -- including the ticker symbols -- along with more on
my strategy for picking winning ideas.
Visit this link to start reading. |
