“I want a stock that goes from lower left to upper right.”
My friend Dr. Van Tharp said that to me years ago…
I thought, “Gee, that sounds so simple. Could that be possible?”
That’s what we all want, right?
That’s what I’ve delivered to my True Wealth subscribers by recommending shares of a simple fund – one I’ll share with you today…
The ProShares Ultra Technology Fund (ROM) is up roughly 90% since I recommended it in April 2017.
It has gone “lower left to upper right.” Take a look:
What is ROM? It’s simple…
It’s an exchange-traded fund that lets you own U.S. tech stocks – with leverage.
It holds the names you’d expect: big tech giants like Apple (AAPL), Google (GOOGL), and Facebook (FB). And it is leveraged two times… So if these individual stocks go up 1% in a day, this fund would go up 2%. (The opposite is true as well.)
The reason why is extremely simple…
Toward the end of most great bull markets, you often have a “Melt Up” period… where stocks go up dramatically in a short amount of time.
And technology stocks usually lead the way. It can be an incredible period of “lower left to upper right.”
My belief is that we are now in such a time… that the Melt Up phase of this bull market is officially here.
If I am right, then you want to own tech stocks – with leverage – because these stocks will go from “lower left to upper right.” If I am wrong, then you want to be out of them.
Can we invest in them when they are going up, and avoid them when they are not going up?
Actually, yes. It’s not difficult at all.
The Dow Jones U.S. Technology Index has delivered a 12% annualized return since its start in 1992. That’s a fantastic buy-and-hold return.
However, if you owned this index with leverage when it was trending up, and stepped aside when it was trending down, you would have brought home some incredible returns.
Using a “dumb” trend system (where you buy in at uptrends and sell at downtrends), you would have earned 27.7% annualized returns when the index was in an uptrend… And you would have avoided 7.2% annualized losses when it was in a downtrend.
You can see this system at work in the chart below. Green means “buy” and red means “sell.” Take a look…
There’s nothing special about this system… In this case, it’s the 10-month moving average. All this indicator does is track an asset’s closing prices for the average over a given period. When it’s above the moving average, buy. When it’s below the moving average, sell.
Sure, you can measure the trend in plenty of other, more complicated ways. But I’m a big fan of the 10-month moving average because 1) it’s simple, and 2) it works.
Again, in the case of leveraged technology, following this simple trend system led to annualized returns of nearly 28% when in buy mode.
Right now, shares of ROM are above this moving average. They’re in an uptrend… moving from lower left to upper right.
That tells us we want to own technology stocks – and shares of ROM – right now. And with the Melt Up underway, we could see explosive gains from here.
You want to own technology stocks now, with leverage, if you don’t already. ROM is the easiest way to do it.
Good investing,
Steve
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Source: Daily Wealth