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How to Turn Flat Stocks into Triple-Digit Winners
By Dr. Steve Sjuggerud
April 1, 2008

Pocketing triple-digit gains in "go-nowhere" stocks – it shouldn't be possible.

But we've done it in our newsletters time and again...

No, we don't buy options or do something wacky or foolish... Instead, we simply practice what I consider good money management. Today, I'll share with you a couple of my favorite money management techniques. These techniques have allowed our subscribers to pocket triple-digit gains – even in stocks that ultimately do nothing over the course of 12-18 months.

Pay attention here, as these techniques will likely make you a heck of a lot more money over the rest of your investing career than any "hot tip" you'll receive.

The best way to show you these techniques is by example... actual recommendations we've made to our subscribers. Let's get started...

PetroChina shares closed at $118.80 a year ago (April 3, 2007). Late last week, they closed at $121.73. So the shares rose 2.5% in about a year.

But True Wealth subscribers pocketed a triple-digit gain on this stock during that period.

We made a triple-digit profit in six months on half of our position... because we sold half when we doubled our money. Then PetroChina hit its trailing stop... So we sold our other half a month later. We pocketed quite a large gain on that, too. The chart tells the story...

Good Money Management Leads
to 100% Profits in PetroChina
China Souther Airlines Co. Ltd.

Our PetroChina trade used two money management techniques: selling half when you double your money and using a trailing stop to preserve your gains.

Another example is shares of JDSU... We recommended this stock back in 1999. Shares ran up more than 1,000% in a little over year after we bought it. Then they fell 25%, triggering our trailing stop. Our subscribers pocketed gains of just under 900%.

How to Make 900% on a Flat Stock
China Souther Airlines Co. Ltd.

In this trade, we followed another of our money management secrets... We let our winner ride. Next, we stuck strictly with our discipline... Once shares of JDSU hit our trailing stop, we got out – to the tune of nearly 900% gains. (Thank you very much!)

We never expected the stock to soar like it did. And we never expected the stock would return to where it started just 18 months before... But it did!

In the end, JDSU was a flat stock. But thanks to our money management techniques, letting our winners ride and following our trailing stop strategy, readers made a whole lot of money.

We have more examples...

We bought shares of Seabridge Gold in my letter Sjuggerud Confidential less than three years ago. We sold half when it doubled. And we let the rest of our winning position ride. Now we're up more than 800%. Also, we have our exit strategy in place, which will lead us to close out our position in the stock in about 12 months.

Good money management can make you even more money than good stock picks... as the results of these stocks show.

The secrets to good money management are: Sell half when a stock doubles. Let your winners ride. And have an exit strategy – the failsafe one is a trailing stop.

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We use these strategies because we can't know the future... but we want to maximize our reward and minimize our losses no matter what it holds. Think of it like poker: We try to play our money the best for whatever hand we're dealt.

I can't promise these techniques will make you money on every trade. But you will have the most chips left at the table toward the end of the game... and that's the goal.

Good investing,

Steve

Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

Sign up today to read more investment ideas from Steve Sjuggerud.

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WHY COMMODITIES COULD MOVE SIDEWAYS IN 2008

After two months of soaring gold, oil, and grain prices, commodity bulls are getting a refresher course on how quickly things can change in the market. The benchmark CRB Index fell 9% in just a week last month.

The "CRB" is an index made up of the most commonly traded raw materials. You can think of it as the Dow Industrials of commodities. Energy represents the largest weighting by far, at 40% of the index.

Led by crude oil's huge rally, the CRB has increased 25% in just the past year... and now looks stretched to the upside. Given this condition, we wouldn't be surprised to see CRB move sideways or even down for a year.

We're believers in the long-term commodity bull market... but we also realize no market runs in a straight line to the sky. Even during their bull market of the 1970s, commodities moved sideways for several years before making a huge leg up into 1980. This bull market will be no different.

China Souther Airlines Co. Ltd.

Farmers are expected to plant less corn, but more soybeans this year, according to the Department of Agriculture.

Corn prices have skyrocketed in recent years, helped by the burgeoning ethanol industry, which turns the crop into fuel, and rising worldwide demand for food. The higher prices have hurt poultry, beef and pork companies, who use corn to feed their animals.

Farmers are expected to plant 86 million acres of corn this year, the government forecast Monday, down 8 percent from 2007, when the amount of corn planted was the highest since World War II. The decreased supply could drive corn prices even higher – a cost for food producers that could be passed on to consumers.

According to the agriculture department, corn planting is expected to remain at historically high levels but could be down this year because of the high expense of growing corn and favorable prices for other crops, such as soybeans.

As many farmers have made that switch, soybean planting is expected to be up 18 percent this year, at almost 75 million acres.

– Associated Press

Barclays Plc started selling its Investment Legends Fund in Hong Kong that will invest in companies, funds and commodities owned by managers such as Warren Buffett, Jim Rogers, Mark Mobius and Bill Gross.

The fund, the first of its kind in the city, aims to give Hong Kong investors an opportunity to "share the performance and investment insights of a group of investment legends and successful companies in one fund," said a brochure from Barclays.

The legends fund will initially invest 40 percent of its assets in equities, 20 percent in fixed-income products and 40 percent in commodities, the document said.

The equity investments are expected to include shares of Buffett's Berkshire Hathaway Inc., Black Rock Inc., the largest publicly traded U.S. money manager, and Leucadia National Corp., a holding company with interests in insurance, wine and real estate, it said.

Bond investments will include the PIMCO Total Return Bond Fund, managed by Gross, and commodities products managed by Jim Rogers.
– Bloomberg

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