What is “UnDiversified Investing?”

“UnDiversified Investing” is my method of stock market investing that enabled me to generate far above average investing returns.

Brief History: I was frustrated with the losing year my so-called “professional money manager” had turned in for me during 2010, a year in which the S&p 500 gained 15%! So on January 31, 2011 I moved my IRA funds into Charles Schwab accounts where I do my own trading and manage the money myself. One year later, January 31, 2012, my main trading account had increased by +195.82%!. I know that figure may be hard to believe, I would not have believed it myself if I had not seen it with my own eyes. I show you my actual schwab account in a video on the website below to prove it.

As the name implies, “UnDiversified Investing” is a strategy of “putting all of your eggs in one basket” and then watching that basket VERY carefully!
This is the exact opposite pf the approach that investors are traditionally taught which is to spread your investment risk among multiple stocks in multiple market sectors.

For example, let’s say you are invested in 4 different sectors for one year (I won’t name them because that’s not important for this example):

Sector A +50%

Sector B – 25%

Sector C -10%

Sector D – 13%

As you can see in the example above, by spreading your investments over 4 different sectors the 3 down sectors wipe out most of the returns for Sector A so you end up with a small gain at the end of the year when you could have been up 50% if you put ALL of your money in Sector A only.

That is the essence of the “UnDiversified Investing” strategy. Find a hot sector and go “all in” in that sector exclusively for maximum gains.

But that’s only part of the strategy. The rest of the strategy involves knowing which stocks to pick in that sector and knowing when to get in and when to get out. “Buy and hold” does NOT produce the kind of returns that I’m talking about.

For example, I made most of my money in 2011 by investing in silver and silver mining stocks. But silver actually finished DOWN 10% for the year at the end of 2011. So how did I manage to make a 195%+ return primarily investing in an asset that closed down for the year? Because even though silver closed down for the year it was highly volatile and there dramatic swings up and down along the way. I used tools such as “cycles,” technical analysis and risk management to get in near the lows and out near the highs of the peaks and valleys throughout the year.

There is a lot to this and you can learn more about it by going to my website at: UnDiversifiedInvesting.com