SAM's Premium Newsletter


Today, you have the tools to manage your own money for low cost.

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the 3 buckets

We as consumers have more choice and power over our investments today than ever before.

The internet has enabled this.

It has also enabled a lot of noise and it is hard to know who to trust and what to listen to.

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To get started,

Let's simplify our framework into three buckets. 

Bucket 1: Savings–Have enough money in an easily accessible account you can use to pay for emergencies when they come up. And they will. We all have unexpected expenses that seem to pop up at the worst times.

Try Digit. It automatically saves money for you based on your spending patterns.

Bucket 2: Retirement or Stay Rich bucket–This could be your 401k, pension, IRA, or any type of retirement vehicle. It should be LOW-COST and well diversified.

Take a look at Wealthfront, Betterment, or Vanguard. All three offer low-cost, diversified portfolios.

Bucket 3: Speculative bucket–This is money, not in a saving or retirement account, that you can play with, take risks with.  

This newsletter's goal is to help you with Bucket 3. To provide you with an alternative form of active management via a newsletter. 

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Benefits of using SAM:

  1. Transparent cost structure- You pay a monthly or yearly fee. No charging based on AUM. Remember, what you pay in fees comes directly out of your return.
  2. Transparent track record- All trades, good and bad, will be tracked on a spreadsheet. No hiding losing trades.
  3. Control- With today's technology, you can manage all your finances on your phone. SAM's products can be executed entirely on your phone. 

Drawbacks of using SAM:

  1. FrictionUnlike a mutual fund, you will have to execute the trades yourself. You are the fiduciary. However, every major brokerage firm has a mobile app; so executing trades is easy and low-cost.
  2. Behavior- The biggest pitfall for individual investors is their behavior. With more control over your investments, that behavior is on you.

    But don't worry,

    This newsletter will focus heavily on investor behavior and will have a community to support you along the way.

Strategy

There will be 2 types of trades this newsletter will focus on:

  1. Technical–These trades will be based primarily off order flow and supply and demand levels.
  2. Fundamental–Our theme is to look for ideas that are non-consensus. This means buying stocks or macro themes nobody wants to own and the current sentiment is negative.

A good example:

Today is June 8, 2017. Retail stocks have been crushed in 2017 and are very much out of favor. They are non-consensus.

There will be winners in this space besides Amazon(most likely); we just have to find them.

The other part of non-consensus is we have to be right. We won't know in advance if we will be right. We must use our judgement and asses the probabilities as best we can.

Most importantly, we must leave our ego at the door and be willing to change our mind as new information becomes available.

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To achieve above average returns we must find ideas that are non-consensus AND we have to be right.

To do this, we must assemble a portfolio that is different than other investors. That means holding positions that are out of favor and currently getting crushed. 

See diagram below.


Q&A

Q: How do I get started with your newsletter?
A:

(1) Download the Robinhood app to your phone or use your existing brokerage app. 

(2) Make an initial deposit.

(3) Subscribe to the newsletter. 

(4) After you subscribe, execute the trade ideas or use them as a starting point for your own research. 

Q: Why should I subscribe?
A: Wealthfront, Betterment, and Vanguard offer low-cost index products for your retirement account.

I believe a portion of your money should be set aside to take aggressive risks. That is the purpose of this newsletter.

Q: What does a subscription include?

  • The Weekly Update, published once per week. The Weekly Update will discusses our current portfolio, market outlook, and substantial analysis of the week's news. 
  • Trade alerts for stocks, ETFs, and forex delivered via email.
  • Members only Facebook group. 
  • Office hours-4 hours/month via Facebook live where I will answer member questions.

Q: Who is this service right for?
A: DIY investors who are serious about building wealth over 10-20 years. Also a great service for beginners. 

Q: How are you qualified?
A: I have never worked for a fund or investment bank. I am self taught. I was mentored by a trader in Chicago.

I started trading during the 2008/09 financial crisis. I believe my results and analysis will speak for themselves over time.

There are no secrets to this business. To be successful, one must exercise good judgement, common sense, discipline, and patience.

I'm not perfect. I will make mistakes, have drawdowns, and sometimes just be wrong.

But I will be transparent and honest about my results.

An investment professional's goal should be to earn and build trust with their clients, and that is my hope, to build trust with you.

Q: What is your risk management philosophy?
A: All trades will have a level where we will exit. We are not in the business of holding losing trades.

Our stock portfolio will hold between 10-20 positions. 

In addition, each position will make up 5-10% of the total portfolio. Ten percent is the maximum allocation for any one stock. 

One thing you cannot afford as an investor is a catastrophic loss you cannot recover from.

The exception is ETFs. Larger position sizes will be taken( up to 20%). ETFs consists of a basket of stocks, so no single stock could sink our portfolio.

IMPORTANT-We are running a concentrated portfolio. This portfolio will be more volatile than a traditional passive portfolio. Prepare your mind for it.

In addition,

I believe the 80/20 rule will apply to our portfolio. Meaning, 20% of our positions will give us 80% of our results. 40-50% of our trades will likely turn out to be losses. The key is cutting losses quickly, and holding winners until they have run their course.

For currencies, I recommend risking between 1-3% of your equity per trade. Using too much leverage has been responsible for many trader's accounts going to zero.

Q: What will you invest in?
A: 

(1) Russell 1000 stocks-These stocks make up over 90% of the market capitalization of U.S listed stocks. We will occasionally invest in companies below this threshold. 

(2) Major ETFs-These will include index, sector, foreign, and other speciality ETFs. We will not trade leveraged ETFs of any kind.

(3) Major currency pairs such as EUR/USD and the crosses such as GBP/AUD.

Q: How long will you look to hold your trades?
A:
For equities and ETFs-1 year +.
For currencies-1 week to 3 months.

The above guidelines are not hard rules. We will be flexible and hold a position until it makes sense not to. We are looking to capture the big moves and those take time.

Q: Why do you include currencies?
A: I believe they offer good risk/reward opportunities with a chance to use modest leverage. Most traders use too much leverage when trading these instruments. We will not.

Q: How many trade alerts should I expect?
A: Between 1-4 per month. Good risk/reward trades don't come along often. We must be willing to sit on our hands most of the time. 

Trade alerts will either be end-of-day or end-of-week. No day-trades.

All trades, winners and losers, will be tracked with a spreadsheet. I will post closed trades once a quarter to the blog so non-subscribers can see the performance. 

Q: How much does a subscription cost?
A: $19/month or $99/year. Save over 50% by signing up for the yearly plan.

Q: Do you offer refunds?
A: No, but you can turn off auto-renew anytime by logging into your account.

Q: What kind of support will you offer?
A: Our main support channel and community will be a members only Facebook group. Members can reach me by email anytime.   

Q: How and when will I get the trade alerts?
A: I don't know in advance when opportunities will become available.

When the model portfolio takes a trade, you will be notified via email.

Q: What is most important to you?
A: Building trust with my members. 

If you interact with me enough, you should learn that I am not hustler. 

Q: Anything else I should know?
A: You can check out my investment philosophy here and more about me and what I am trying to do here
Also,

This is your life and your money. Make investment professionals earn your trust. Don't buy into hype or get rich quick schemes, they don't exist.


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