[Inside Wall Street with Nomi Prins]( Mariaâs Note: Have you heard of the â10Ă10 Approachâ to investing? The idea will sound familiar if you read [yesterdayâs dispatch](. In it, Rogue Economics friend Kris Sayce showed us four steps to make sure you keep your gains. In todayâÂÂs guest edition, Kris breaks down the 10ĂÂ10 Approach in more detail. As he told us yesterday, itâÂÂs an important part of the story if you want to protect â and continue to grow â your wealth⌠--------------------------------------------------------------- A Simple Three-Step Way to Invest By Kris Sayce, Editor, Legacy Research Group [Kris Sayce] We love growth opportunities. But over time, weâve seen how regular investors make big mistakes by approaching growth stocks the wrong way. They tend to put all their proverbial eggs in one basket. When one sector is hot, they go all-in. They either make money⌠Or they lose money, search for the next hot sector, and go all-in on that too. And on it goes. We figure that by the end of it, they likely havenât made a single dime from their boom-and-bust investing strategy. Thatâs why just over two years ago, we reminded folks of the 10Ă10 Approach. And given where the market is now, itâs the perfect time for a refresher. Why We Like 1,000% Shots Best The 10Ă10 Approach: You couldnât ask for a simpler way to invest. Itâs effective too. So, what is it? And what makes it such a great way to invest? The 10Ă10 Approach is an idea we learned from investing legend Doug Casey. Itâs a simple three-step way to invest. First, you take your investible capital and split it into 10 lots. Letâs say you have $50,000, either in investments or standing by ready to invest. That means allocating $5,000 to each lot. Next, you look for 10 separate investment ideas that have relatively little in common. Now, that isnât always as easy as it first seems â it takes some thinking. Finally, look for investments with the potential to earn you 1,000% returns over a business cycle. (For ease of understanding, think of a business cycle as the period between one stock market bottom and the next, although itâs a little more nuanced than that.) The reason for picking 1,000% gainers, or 10-baggers, is that you only need one or two of your 10 investment ideas to pay off in a big way. The rest may produce no more than average returns. Some may fail to take off entirely â potentially leading to losses. But even if only one of your ideas pays off, it will more than make up for any losses on your other investments. Also, one or more of these ideas can include dividend stocks. It will no doubt take more than one business cycle for a dividend play to become a 10-bagger, but thatâs OK. You may have some investments that you hold for 20 or more years, paying dividends all the way. Other investments may only last for a year or two as you speculate on a current trend. One thing to note: Many people assume this means that every investment you make is a high-risk speculation or even straight-up gambling. Thatâs not true. Donât mistake making big returns for the riskiness of an investment idea. Risk is only part of the equation when it comes to measuring potential returns. Thereâs also time. Are you buying the investment at the peak or bottom of a business or stock market cycle? And how much time do you expect to wait for the investment to play out? Some ideas may take 10 years due to a longer business cycle or slower growth. Others may take only a few months to play out â especially if the idea is hot, and youâre lucky enough to get in at just the right time. Do This Simple Exercise With Your Investments Now Hereâs the simple, three-step process of the idea⌠Step 1: Take your total investible assets. Step 2: Split it into 10 equal lots. Step 3: Invest in 10 mostly unrelated investment ideas. Now, letâs put this into practice. Your next step is to break down your investments as they stand right now. Take a piece of paper or create a spreadsheet with 11 columns. In the first column, write all your current investments. Depending on how you have things set up right now, it may be a long list. Next, starting at the top, youâll move each investment into one of the other 10 columns. If your next investment is similar to the first one, put it in the same column. If itâs different, put it in a separate column. Work your way down the list. Do You Have 10 Perfect Columns? At the end, youâll have several columns with your investments grouped under each. See how it looks. If you have 10 perfect columns, it likely means youâre well diversified. If you only filled a few of the 10 columns, it may mean youâre under-diversified. And if you had to create extra columns, it may mean youâre over-diversified. Why is that bad? Well, for example, if youâre under-diversified⌠A plunge in one of the sectors youâre invested in could cause outsized losses for your portfolio. Can you afford that? Many canât. And if youâve got 20 or 30 investment ideas⌠How can you stay on top of them all? Youâll likely miss crucial news or data that affects your portfolio. However it looks, youâll have a great visual snapshot of your investments. Regards, Kris Sayce
Editor, Legacy Research Group --------------------------------------------------------------- Like what youâre reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: Inside Wall Street Feedback). MAILBAG Will you be implementing the 10x10 Approach? What are some other ways to visualize your investments? Write them at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: Inside Wall Street Feedback). [Rogue Economincs]( Rogue Economics
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