Pyramiding – How to Win Big in the Stockmarket

Regular readers of my alerts will have noticed two things. During a bull phase in the stock market I only write about stocks to recommend buying their shares, hence my dictum that if a stock is mentioned it is recommended. Secondly, I write again and again about the same stocks so that the number of recommendations for the same share can easily run into double figures.

There is a reason why I do this. It relates to how I invest myself. I am an aggressive investor. I liken how I invest to driving a car with the accelerator pedal pressed to the floor. When I buy I buy with five times leverage. As and when the shares go up and create unused equity on my account I invest that too so that my leverage remains around five times.

This is a mirror of what happens with leveraged ETFs like QQQ3. In effect, when they go up, they create spare equity which is reinvested to maintain the three times relationship between total investment and a notional equity figure. (This was explained in an earlier alert).

If you do this on a daily basis, which I do, it is extremely aggressive in producing gains in a bull phase but is also punishing on the downside which is why early in a market correction I have to sell. This makes me interested in effective sell signals as well as buy signals but just now we are in a bull phase and don't need to bother about them.

Buying more of the same share in a rising market is a form of pyramiding which is a good description of what I do. I can start with say just $5,000 invested but if things go well that can turn into $50,000 or even $§100,000 invested in just the one share. It is a very exciting but also testing way of investing and will not appeal to everybody. The good news is that you need only risk a relatively modest sum to achieve incredible returns and you can do it the old school way and just buy shares, unleveraged, to add to your super sexy growth share portfolio.