Jani’s Triple Levered Method – Part I

The Genesis:

Three decades ago I bought my first stock and little did I know what a long and wild ride this would become. Like everyone else, I thought, “How hard could this be?” (Ignorance is bliss!) This adventure would take me through some of the highest of highs and the lowest of lows. (Experience is the name we give our mistakes.)

Through those 30+ years, I’ve been experimenting, learning, and honing my craft. I tried everything from speculating in small growth stocks, to chasing whatever was going up the most, to options strategies so complex they require a math degree to calculate the profit and loss profile.

Some of these experiments worked well. Others not so much. But through it all, I’ve been growing as a trader every step of the way. Complexity is undeniably seductive (can anyone say iron condor?). But the thing I kept coming back to was the beauty of simplicity. Why should I make something harder when I can make it easier?

This was the genesis for my Triple Levered Method. If the first step of every trading strategy begins with analyzing the overall market, why not stop there? The more moving parts a strategy has, the more opportunities we have to screw it up. I firmly believe in doing one thing and doing it well. The added benefit of focusing on the overall market is it is something that will never go out of style. Once I mastered it, I could use it for the rest of my life.

Without a doubt, landing the biggest winners is a huge thrill. Who doesn’t want to brag to their neighbors about buying AAPL in 2003? But chasing the hottest stocks also means learning the behaviors and nuances of 100s of stocks. And the challenge isn’t just about discovering the biggest winners, but also knowing when to get off. Is anyone still bragging about their PALM, NOK, AOL, or BBBY positions? Of course not. And no doubt AAPL, AMZN, and TSLA will join the ranks of has-beens eventually.

I landed on swing trading the indexes out of necessity. In 2008, my first son was born and that dramatically changed how much time and energy I had left to give to the market. Previously, I would spend hours every day pouring over hundreds of charts, searching for that diamond in the rough that was on the verge of exploding higher. But the demands of supporting my wife and newborn forced me to change everything.

While I fell back to swing-trading the indexes ten years ago out of necessity, I never realized what a life-changing revelation this simple strategy would become. Hours of research turned into minutes. Following hundreds of stocks and juggling a dozen positions turned into watching one thing and only one thing.

This simplification was born out of necessity, but what I didn’t expect was just how wildly profitable this strategy would become. I always assumed profitability would be a compromise until I got back to chasing the biggest winners again. But as it turned out, I made more money with this simple swing-trading strategy than I ever did chasing home runs.

Less work and more money? It sounds too good to be true, but that’s exactly what happened.

Next —>  Part II: Strategy

Part I: Genesis

Part II: Strategy  <— Next
Part III: Advantages
Part IV: Comparing results
Part V: Downsides
Part VI: A well-designed portfolio
Part VII: Where to go next