Investment Strategy

The key to earning good returns in the stock market is to manage risk. AlphaProfit’s investment strategy is geared towards mitigating and managing risk.

If you haven’t heard this before, here’s an example that’ll drive this truth home:

When you invest $100 and lose 50% of it, you have only $50. Now if you earn 50% on your remaining capital, your account will grow only to $75. You are still $25 or 25% in the hole. You would need to earn 100% or double your $50 to just break-even from the 50% loss.

Managing risk is really job #1.

Or as Warren Buffet would say, “Rule #1: Never lose money. Rule #2: Never forget Rule #1.

When you manage risk, you keep what you earn and build on your earnings. You succeed in building real wealth.

investment strategy uses three methods to reduce and manage risk

AlphaProfit’s investment strategy uses three potent methods to reduce and manage risk, each supporting the others like the three legs of a stool.

To create wealth and secure your retirement, AlphaProfit’s investment strategy uses three potent risk-reduction and risk management methods each of which impacts and improves the others:

  1. Tactical Asset Allocation
  2. Valuation and Quality Analysis
  3. Optimal Diversification

Tactical Asset Allocation to Lock Gains and Build Wealth

Remember the aphorism, ‘Buy low and sell high’. AlphaProfit helps you actually put this to practice.

Tactical Asset Allocation is active management. It is NOT buy-and-hold.

AlphaProfit analyzes an eclectic group of economic, market sentiment, and technical indicators to signal you to change your asset allocation to take advantage of current market conditions.

For example, it may be prudent to move money from cash and bonds to stocks when stocks are dropping. By buying when valuations are low, you get more bang for your buck.

After you buy low, you sell high using AlphaProfit’s tactical asset allocation signal. You do NOT act on emotion.

By selling your investments when they are hot, you not only lock your gains but also generate the buying power to take advantage of juicy opportunities.

You are ready to pounce on plump pickings created when less-disciplined investors sell investments below their true value during the next perceived crisis.

Valuation and Quality Analysis to Avoid Permanent Loss of Capital

Investing textbooks usually define risk as price volatility.

While this statistical term is helpful in comparing assets or trading strategies, it is less relevant from an individual’s wealth-building perspective.

What is more important from a wealth-building perspective is permanent loss of capital.

A permanent loss of capital differs from a temporary loss on paper due to market volatility.

Permanent loss of capital is when an investment’s value declines so much that it is unlikely for the investor to break-even within a reasonable holding period.

Owning Lehman Brothers or AIG during the 2008 financial crisis or owning Cisco or Qualcomm during dot.com crash of the late 1990s … this is permanent loss of capital.

Some companies like Lehman disappear altogether.

Some like AIG require substantial amounts of new capital to stay afloat. The ownership of current shareholders is diluted so much that there is no hope for breaking even.

In the case of Cisco and Qualcomm, investors paid dearly for owning these overvalued shares. The companies themselves survived. In fact, they have grown their EPS manyfold since then. Yet, their stocks have not scaled above their 2000 peak even after 18 years.

To help avoid permanent loss of capital, AlphaProfit probes companies with the ValuM investment evaluation system developed by AlphaProfit’s founder Dr. Sam Subramanian.

This system ensures:

  1. Selected investments are NOT at risk of being impacted by bankruptcies and
  2. Selected investments are valued appropriately in relation to their growth prospects.

Naturally, the system avoids the latest investment ‘fads’ … that are typically short on profit and long on growth expectations.

Optimal Diversification to Lower Risk without Sacrificing Upside

The third leg of AlphaProfit’s risk-reduction strategy is optimal diversification … the keyword here being optimal.

In a bid to hit home runs once in a blue moon, some investment newsletters use a one-pronged approach that concentrates money in a few highly correlated investments, i.e., investments that move together both up and DOWN.

Such an investment strategy is fraught with risk.

What happens if the investment thesis turns out wrong? … All your investments blow up.

At the other end of the spectrum, there are ‘advisers’ who spread your money in too many investments under the pretext of reducing risk via diversification. This often leads to just ‘diworsification’ … where poorly performing investments lower your overall return without lowering risk.

To lower your risk without compromising upside, AlphaProfit rigorously analyzes cross-correlations between investments and helps you invest in an optimal number of investments to take advantage of industry and market trends.

The Proof of an Investment Strategy is in Profits You Retain

While earning market-beating returns in bull markets is good, you can build real wealth ONLY if you can retain the gains during bear markets.

AlphaProfit’s 3-pronged investment strategy to minimize risk has enabled users to:

  • Avoid the troubled financial sector from 2007 through the first-half of 2009.
  • Exit real estate-related investments in a timely manner in June 2005.
  • Avoid losses in the technology sector from June 2000 through June 2003.

The foresight to avoid troubled sectors has helped AlphaProfit’s investing system to grow money at a 17.6% compound annual rate since 1994.

A dollar invested in AlphaProfit’s system has grown to $57.53 while a dollar invested in the S&P 500 benchmark would have grown to only $8.77

In other words, AlphaProfit's system has beaten the market nearly 7-to-1

The quality of recommendation you receive in the Premium Service match up to the high standards AlphaProfit’s principal Sam Subramanian sets for managing his personal accounts.

Sam uses all recommendations he provides you in the Premium Service in managing his personal accounts.

Your interests are fully aligned with Sam’s success in managing his personal accounts.

Succinctly said, Sam does not make money in the markets unless you do.

Sam makes money in the markets only when you do too.

In AlphaProfit’s Premium Service, you get advance notification of each recommendation AlphaProfit makes. You get ample time to place the trades in your account at the same time the recommendation goes into effect.

The result: you earn the same return we report and Sam earns.

You do not have to take our claims at face value.

You can verify every single past recommendation and its performance.

All you do is register, in case you have not already not done, and log in to your free account!