Long and Short

Since the stock market can reverse direction at any time, it is a good idea to be both long and short at the same time. The catch is that you have to buy your long or short position when it is near one of its low points in order to profit a lot. Then, when the stock market makes a hard move up or down, you can make 10% in a day if you are in the right stocks. If the macro movement of the market is firmly in one direction for weeks at a time, you could even make as much as 100% or more in leveraged ETFs.

For example, the stock market had been beaten down for weeks at the end of September 2011. Then, on the second day of trading in October, the Dow jumped 153 points signaling a possible change in the trend direction for stocks. ERX, the triple long energy bull ETF that is related to oil, jumped 8.5% for the day. If the stock goes from its low of $28 to its high of $85 in the next few months, you will have a 200% gain! Even if it takes a year for ERX to climb to its former high, a 200% gain would be fantastic for a year's investment.

Then, on the other side of the coin as I have recently suggested, TVIX is great stock to own whenever volatility is high and times are gloomy for stocks. The financial condition of the U.S. and the world is still on shaky ground. You could have also made over 200% on this stock if you had bought it in June or July before the stock market started its downtrend.

So, remember to buy winning stocks when the market is going against them. Then, simply hold on for a few months for double or triple digit gains whenever the general trend goes a couple of months to the downside or the upside. There is enough bad news in the world to bring stocks down for an extended period at least one time each year. Then, on the other hand, we have enough bulls in the world to send stocks up for at least a couple of months each year. Just be willing to buy winning stocks when they are cheap and have the patience to wait until they jump significantly in their prices. You only have to hang on a few times each year to make a fortune!