Let's talk about a strategy that reduces your risk while optimizing your potential gains. And it does all of this while shortening the amount of time capital is locked up in a single position. If that sounds good to you, then you're in luck. Because that's what I'm going to cover today. And to do so, we're going to look at a very popular sector... video games. Like every red-blooded human on this planet, I like video games. I grew up playing them. I still play them every single day. But my passion goes beyond just participating. Video game stocks are some of my favorite plays in the market. In fact, across my various publications, I have open plays on four different video game and esports companies. And subscribers are sitting on gains ranging from the single digits to more than 700%. But few companies have rewarded me more over the years than Electronic Arts (Nasdaq: EA). And soon you'll see why. A Dozen Wins and CountingAt the moment, shares of Electronic Arts are trading right around their 52-week high. They're up about 14% year to date. Now, that's not a barn burner. But given the market we've seen in 2020, it's nothing to scoff at. Since January 1, 2017, Electronic Arts' shares have gained roughly 55.4%. That's better than the S&P 500 during that stretch, though it underperforms the Nasdaq... So, as a multiyear hold, the return was so-so. But despite that lukewarm performance over the past several years, Electronic Arts has been not only one of my favorite stocks to trade but also one of my most profitable. During that same stretch from 2017 to today, I've closed 12 winners on Electronic Arts. I did have two losses. No one bats a thousand. But I did have 10 consecutive wins. And seven of my total wins were for gains of 100% or more, with three gains of more than 450%. That also doesn't include my current positions in Electronic Arts. My readers are up nearly 30% on the shares (more than double the year-to-date return) and have a triple-digit gain on the call options. With a dozen wins under my belt from just one company, it's easy to see why Electronic Arts is one of my favorite plays. So, now, the all-important question: How did I accomplish this? Focus on the Best... Forget the RestFor the past seven years, I've been running one of the most successful investment services out there. It's built on this basic premise... Shares of most companies move asymmetrically. That means, within a given year, there are blocks of months when shares will perform well - sometimes even exceptionally well. And there are other months when they won't. It's not random either. It's usually the same months each and every year. And more often than not, that relates back to the company's underlying business, revenue and earnings. That's because most businesses are cyclical or seasonal. And in seasonal trading - which is what I excel at - all I want to do is focus on a company's best months of the year and forget the rest. That's how we can consistently score big while limiting our downside risk. So let's look at the best and worst months for Electronic Arts shares over the past five years. And you'll see why I always buy June calls... Right off the bat, it's easy to separate the best from the worst. In January, over the past five years, Electronic Arts shares have averaged a 7.58% gain. And in May, they've averaged a 12.14% gain. Those are the best months. |
No comments:
Post a Comment