From the desk of Steve Strazza @Sstrazza
“There’s no such thing as a free lunch.”
Many of you are already familiar with this popular market adage as it is a commonly used quip in our industry.
All it really means is that you can’t get something for nothing from the market.
Have you ever bought a high-yielding stock for the dividend and rode it into a big drawdown just for them to announce they’re cutting the payout?
Did you listen to a friend about a biotech stock that was supposed to rip higher on positive FDA results… but it actually gapped lower?
How about following the analyst community into a stock that was a consensus buy… until it turned out not to be?
In all of these scenarios, the investor is simply looking for a free lunch. And 9 times out of 10, these situations don’t work out. There are no easy investments or get-rich-quick tricks on wall street. At least not sustainable ones. You have to put in the work.
One rule that I live by for my own investing is this: “If it seems too good to be true, it probably is.”
I’ve learned first-hand to run from investment opportunities that don’t pass the “smell test” and I believe I sleep better at night for it.
But there are definitely strategies that we can employ and proven processes we can follow to increase our win percentages and profitability. Our friends over at Stock Trader’s Almanac have found a strategy they believe is so good that they even call it “Wall Street’s only free lunch.”
In this post, we’ll discuss the strategy and have some fun by putting our own little spin on it.