It’s not rocket science… or is it? What a Rocket Scientist Taught Me About Investing
Adam O’Dell here again.
I want to talk about the benefits of looking outside your own area of expertise if you want to truly become a master of something.
In this case, we’re talking about how to master the art of short term trading – a skill that can put tens of thousands of extra profit in your account each year.
I’m sure you’ve heard the expression “If you’re not the smartest guy in the room, you’re in the wrong room.”
I’ve heard that quote applied to business leaders like Michael Dell and Jack Welch, but it actually goes all the way back to Chinese philosopher Confucius.
The gist of it is this… no matter how smart we think we are, we can always benefit from surrounding ourselves with other smart people. And that’s especially true when we consult with people from different backgrounds.
I recently met with an aerospace engineer and we were talking about the power of systems. We even got into some of the particulars about my trading system and I was shocked when he made an analogy comparing it to the power of flight.
I loved his analogy so much, I wanted to share it here…
Think of it this way… a Boeing 747 needs to hit 180 mph before it can take off from a runway.
Why 180? Because that’s the speed it takes to overcome both the drag and the weight of the airplane and get it in the air.
Anything less than 180 mph and that plane would drop right back down the ground… a catastrophe.
But it’s not just the 180 mph that matters… there are other factors like wind speed and direction, temperature, altitude… all of them have to be taken into account for a successful takeoff.
Your system looks at companies the same way… looking for the right signals to line up and enable lift off.
Anything less than complete agreement… again, a catastrophe.
See for yourself…
I love it!
And the more I thought about it, the more I realized he was right.
Airplanes have hundreds of thousands of parts. And the physics involved make even a math guy like me nervous any time I’m on the runway.
But when he broke it all down, I realized that the numbers required to get a 747 off the ground and the numbers required to get a stock to rocket higher aren’t that different.
Think of drag and weight as everything you could have going against a stock – earnings, economics, even investor sentiment…
Just like an airplane, a stock needs a certain amount of momentum to overcome all of that and establish a steady trend upward.
And when a stock’s momentum has reached its “takeoff speed,” my system will almost always send me that “Go signal” I’m looking for.
At that point the stock or sector I’m looking at stands a very good chance of rising over the next 90 days.
And these gains can happen regardless of what the broad markets or underlying fundamentals look like.
With this trigger in place, obvious data like volume, earnings and P/E ratios are pretty much meaningless.
What matters are just two things:
Is the stock’s price moving higher over my required timeframe?
And is the momentum behind that price trend strong enough to carry it higher?
Because just like a Boeing 747, if it doesn’t, it’ll crash and burn.
By using multiple signals in my evaluation of a stock’s momentum I’m able to filter out many of the mistakes other trading algorithms make.
I’ve got to be honest, I already had a lot of faith in my system.
But knowing that I’ve got the unofficial stamp of approval from a rocket scientist is even better.
Here’s a few examples of the rocket-powered profits we’ve seen over the past several years from this system:
Those are all examples of “mini cycles” I’vee discovered and then turned into real trade opportunities… each one a chance for our readers to book huge wins with Cycle 9 Alert.
And there are plenty more of these opportunities in the months ahead.