Daily Gains Letter

Investment Strategy

An investment strategy is a protocol and methodology for allocating funds of a portfolio. This strategy is based on an investor’s risk profile. The more risk the investor is willing to take, the greater the potential returns, but also the higher risk of a loss in capital. There is a whole universe of investment strategies, from the least risky of buying treasury bills and government bonds with high credit ratings, to the more risky of buying stocks based on fundamental analysis, technical analysis or simply buying and holding for the long term. Some investors also look to stocks with dividends that return a yield over time, to mitigate some of the risks of the stock market.


Call Options: Why They Should Be Part of Your Go-To Investment Strategy



Call optionThe stock market is showing that it will not be easy to move to new record-highs given the overhanging uncertainties around the world, stretching from our backyard over to the Middle East and on to China. The current market risk is high, but as I mentioned briefly in my previous commentary (see “How to Limit Risk and Profit from Momentum Stocks Like Netflix”), you can play the upside via a leveraged risk management strategy: call options.

Use of Call Options on the Rise—And for Good Reason

While the majority of professional and retail portfolios are composed of stock positio ... Read More



How to Limit Risk and Profit from Momentum Stocks Like Netflix



Momentum Stocks Like NetflixIn the past, I have often talked about the quick money that can be generated trading big-volume momentum stocks in the Internet and social media spaces. Take a look at the biggest companies by market-cap on the NASDAQ and S&P 500, and you'll find numerous highflying, valuation-defying stock market trades. Of course, I'm talking about the likes of Facebook, Inc. (NASDAQ/FB), The Priceline Group Inc. (NASDAQ/PCLN), Twitter, Inc. (NYSE/TWTR), LinkedIn Corporation (NYSE/LNKD), Tesla Motors, Inc. (NASDAQ/TSLA), and Netflix, Inc. (NASDAQ/NFLX). Apple Inc. (NASDAQ/AAPL) is not in this group because the stock’s gains tend to be steadier, rather tha ... Read More



Why Blue-Chip Dividend Stocks Always Make Sense



Blue Chip Dividend StocksIn the first quarter, we witnessed a market shift back to higher-beta technology, growth, and small-cap stocks as investors searched for higher potential profits. Yet while this investment strategy makes sense, you also need to make sure your portfolio is diversified across numerous sectors and stocks with varying market caps, including dividend-paying stocks. Dividend stocks may not have the upward explosiveness of smaller technology stocks or the large-cap momentum stocks like FaceBook, Inc. (NASDAQ/FB), Twitter, Inc. (NYSE/TWTR), and Netflix, Inc. (NASDAQ/NFLX); but you know the large-cap blue-chip dividend stocks found on the Dow Jones Industrial Average and S&P 500 offer ... Read More



Top Stocks to Consider Right Now: Defensive and Dividend-Paying Stocks



Dividend paying stocksSuccess in the stock market is all about balancing risk and reward. Too much risk and you leave yourself vulnerable to added downside when the stock market turns, as may be the case at this time. However, too little risk and you don't fully partake in the upside moves of the stock market, though your downside risk is lessened. The key is to understand the stock market we are in and alter your investment strategy accordingly. Prior to the flush in the stock market on Wednesday, technology growth and small-cap stocks were leading the broader market higher this year. Yet as we also witnessed, the higher-beta stocks were also vulnerable to added selling on Wednesday. What happened on Wednesday (and what hap ... Read More



Top Three Sectors to Profit from Weak Oil Prices



Oil PricesOil prices are on the downside, and we could see West Texas Intermediate (WTI) oil decline to the $40.00 level and below. A few years ago, the mere mention of oil in the $30.00 level would have been viewed as silly, as many believed $100.00-a-barrel oil prices would be the norm. But here's the problem: the advanced fracking technique to squeeze out oil from the cracks in the rock led to a revolution in oil production, which inevitably is hurting oil prices. The good news: it’s creating an investment opportunity for aggressive investors.

Pressures Pushing Oil Prices Downward

Now, we have massive domestic oil production from the shale oil in Montana and North Dakota that has helped to produce a flood of oil i ... Read More



How to Profit from the Major Stock Market Correction Coming Your Way



Trading Opportunities for InvestorsThe stock market continues to want to edge higher, but beware. I still sense there will be more downside moves that will provide a trading opportunity. At this juncture, I would be looking for sell-offs in the stock market and chaos. Just like what we saw in 2008 when the stock market and big banks crashed, when a stock market correction comes, there will be aggressive trading opportunities for more active traders.

Stock Markets Down, but Bigger Adjustments Ahead

The strengthening dollar will make American goods and services more expensive for exports, which will likely result in a squeeze on the profit margins of multinational companies that do much of their bus ... Read More



Small-Cap Stocks Outshining NASDAQ, S&P 500; Top Investment in 2015?



Top InvestmentIf you haven’t already done so, you should start to take a closer look at small-cap stocks.

Small-Cap Stocks Outperforming in 2015

While small companies underperformed in 2014 with the Russell 2000 gaining a mere 3.53%, compared to the 13.40% and 11.41% advances by the NASDAQ and S&P 500, respectively, I believe that as the long as the economic renewal holds, small-cap stocks could turn things around this year. So far in 2015, small-cap stocks are second only to the technology sector. The Russell 2000 is up 2.10% as of Thursday, versus a 4.88% move by the NASDAQ. At this time, small-cap stocks are beating the S&P 500 and DOW; it’s still early on, but it’s looking good coming off of a soft ye ... Read More



Netflix Successful, but Expensive; How to Invest with Less Risk



Invest in Overvalued StockThe third season of House of Cards will likely once again see a massive influx of new subscribers flow to Netflix, Inc. (NASDAQ/NFLX). The company is sizzling on the chart and is the “Best of Breed” in the video streaming market at this time. Netflix currently has about 57 million subscribers. Having said that, my stock analysis shows that the top-heavy valuation will need to be fuelled by better top-line growth, especially from the international markets where Netflix is dominant. The company already offers its streaming service in about 50 countries, but it is aggressively aiming to expand into h ... Read More



How Sony Could Surprise Investors in 2014



Investors in 2014As the stock market continues moving higher, it becomes that much more difficult to find value stocks. They’re still there, but one needs to dig a bit deeper to find attractive valuations as part of one’s investment strategy. One company that I've been researching lately is Sony Corporation (NYSE/SNE). Everyone is aware, I’m sure, of Sony, as it’s been around for decades. While the stock had a relatively strong performance in 2013, I believe there is potential for a very good year in 2014, in terms of corporate earnings growth. When people think of Sony, I’m sure it might surprise them that the c ... Read More



How to Prepare for the Stock Market Sell-Off I’ve Been Warning About



Stock MarketWell, that didn’t take long! Just a few weeks ago, I wrote an article stating that investors should begin to worry about the lofty level of the stock market. Since that time, the S&P 500 has dropped by more than five percent in less than two weeks. This market correction won’t be a surprise to my readers, as I have been suggesting investment strategies that can help prepare your portfolio for a large downswing in the market for some time now. When I wrote the article in late January, the S&P 500 was surging, even though the preliminary Thomson Reuters/University of Michigan index of consumer sentiment dropped month-over-mo ... Read More



How Tech Growth in 2015 Is Different from 2000 (and Why It Will Last)



180215_DL_leongThe last time I saw 5,000 on the NASDAQ was way back in early 2000, prior to the collapse of the technology sector and all of the froth and euphoria on Wall Street. If you were trading back then, you would have recalled the staggering froth and frenzy that drove the technology sector to heights that were simply not sustainable and excessive. Well, it took more than a decade, but it looks like the technology sector is on a roll again. I have been bullish on technology stocks as the top growth area in my outlook for this year and so far, this is panning out.

NASDAQ Push to 5,000 Much Different Now Than 15 Years Ago

The NASDAQ traded at its ... Read More