Investment U

An integral part of the Investment U system is a deceptively simple – yet powerful – trading strategy known as the trailing stop.

Using a trailing stop let us ride our stocks as high as they’ll go… but it also allows us to know when we’ll get out of any position, even before we buy. This way, we always have an exit strategy in place that will not only protect us from major damage – it’ll lock in our profits, as well.

Here’s how our trailing stop strategy works…

The main element to the Investment U Trailing Stop system is a 25% rule. We teach our readers how to sell positions they’ve entered whenever they’ve fallen 25% off their highs. In other words, if you buy a stock at $50 and it rises to $100 but then begins to drop… and drop… and drop…

When would you sell?

Well, most investors would hold on for dear life, fully expecting the stock to “magically rebound” at some point. This is the disastrously “sensible” policy known as “buy and hold.” And it has decimated more portfolios than perhaps any other “strategy” out there.

Meanwhile, investors who use the Investment U Trailing Stop system fair much better, because they have a sensible, disciplined approach to the situation.

They’d simply sell the morning after the stock closed at $75 or lower (in other words, 25% off it’s $100 high). Case closed. No debate. Sure they’d eat the 25% backslide, but they’d also enjoy the 50% gain from the original stock price.

Trailing Stop, Discipline… And a 906% Return Secured

The thing about any system is, it’s only a system if you adhere to it religiously. Same with the trailing Stop–You can’t selectively employ it with one stock and not another. You’ve got to apply the trailing stop principal to your entire portfolio. But by doing so, you take guesswork ENTIRELY out of the investing equation.

And while the primary nature of a Trailing Stop might seem defensive, that’s only part of the story. Here’s how some investors managed to lock in an astounding 906% profit on the same stock many folks lost their shirts on… just by using a Trailing Stop.

Even though this story is five years old, it’s the perfect example of the power of the Trailing Stop. In March of 1999, The Oxford Club – IU’s affiliate organization – recommended JDS Uniphase (Nasdaq: JDSU), a rising tech star at the time.

We said then that it “would be the company that would create the next great fortune.”

As it turned out, this stock had a perfect run-up, soaring from our original recommended price of $10.95 up to $110.12 – a whopping 905.66% increase in 14 months. When the stock reached $150, we were still in it. But then JDS began to crater…

Once it fell 25% off that $150 high, it tripped our trailing stop and we sold, at a 906% profit. Meanwhile, the buy-and-holders watched their shares drop down to almost nothing. Currently the stock’s trading at less than $4 a share, meaning some people have held on to watch their loss soar to over 95%.

NFLX: Exiting with a 256% Return – Instead of a Loss

Another good example: Netflix… Last year, Alexander Green of The Oxford Club, a fellow proponent of using the trailing stop, recommended NFLX to our readers on Jan. 29, 2003 for $12.34 a share…

Investors were disappointed when we stopped out on Nov. 17, 2003 at $44.70… They wanted to keep riding Netflix higher, but our trailing stop discipline required that we exit the position – with a 256% return.

Investors who held onto their positions are now sitting on a 10% LOSS. It sure would have been a crime to lose money on something that you were once up almost 300% on… but that’s what a lot of investors who weren’t following the IU System did.

A sad example of the danger you face by investing using your gut – instead of a rock-solid and sensible trailing stop system. The Investment U strategy is designed to take the guesswork out of trading. See the kind of results our readers have achieved.

Explore our methodology.

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