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Picture this: On a Wednesday sometime, you're sifting through your mail, and as you're throwing out the usual junk ads and flyers, you notice a simple but elegant postcard, addressed to you, that's touting a stock. It catches your eye because it's more like an invitation than anything else, with formal, engraved lettering on the cream-colored card. There's no offer to sell you anything, just a curt statement, a straightforward recommendation to buy a stock on the close this coming Friday and to sell on the close the following Friday.
Of course, you don't take any action but you are curious, so you keep the card. The following Friday, you turn to the financial pages and discover that this postcard invitation to make money was a great call. The stock rallied for the week with a $20 gain. Okay, you say, but...
The following Wednesday, another postcard arrives in the mail. It's in the same style, with the air of a simple invitation. There's a recommendation to trade a different stock this time. The instructions are the same, to buy on the close on Friday and sell out the following Friday. You wait and see, and it turns out once again that this trade, too, was a nice gain of $15 a share for the week. You're still not convinced: No big deal, you think, it's just the bull market.
The following Wednesday you find a third card, except this time the recommendation is for a short sale on Friday. As you ponder this recommendation over the weekend, you consider that if this tipster makes money both ways, then maybe this is for real. Sure enough, the stock drops out of bed the following week, losing $30 a share. The business news pundits attribute the fall to profit-taking after a recent runup in the stock.
Now you're more than a little intrigued; in fact, you find yourself checking out the mailbox on Wednesday, hoping to find another postcard. Sure enough, there is. Again, the recommendation is the same strategy, to place the trade on Friday and exit on the following Friday. You're not a fool, so you're not going to chance any money -- not yet -- but each day, you check the Internet for quotes and any news that might move the stock. Wow! The stock takes off, climbing $50 for the week on a surprise earnings announcement. The tipster's trading is now four for four, and if you had been trading just 100 shares, your take would have been $11,500.
You're on the edge of your seat until Wednesday. The mail arrives with the same-style postcard, with the same invitation to buy a stock on Friday and sell the following Friday. You do some research on the company and decide that this is a stock you would buy anyway, so what the heck, you go for it. Bingo! We have another winner as you pocket $18 per share, a $1,800 gain. That's five for five in a row! This is too easy, you think.
The next Wednesday, you check the mail and find, instead of a postcard, an envelope with the invitation inside. This time, the invitation is to subscribe to an annual newsletter for $1,000 a year. The newsletter will give you the same exact Friday-to-Friday forecasts. You say to yourself: Had I placed the last five trades, and I knew ahead of time to take the trades, I'd already be up more than $13,000! What should you do? What would you do?
Next month, I'll tell you what and why. In the meantime, trade well!
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