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Editor's note: Yesterday, Steve Sjuggerud told readers about the amazing run in Chinese stocks... up an astounding 126% over the past year. The big question is, what do we do now? Today, in part two of his series, Steve describes the strategy you need to start using to lock in big profits as this bull market continues...

How We Have Turned $10,000 Into $80,000-Plus Since 2012

By Dr. Steve Sjuggerud
Tuesday, June 30, 2015

In True Wealth Systems, readers who followed my advice could have made more than eight times their money since 2012 in a simple biotech fund.
And just like in China, we don't know when the big trend in biotech is going to end.
So how have we done it?
We're willing to sell... And we're willing to get back in again...
That's how we've made a total of more than eight times our money in biotech so far since 2012.
Specifically, we've sold our position in this biotech fund TWICE and gotten back in again. The lesson is, you can sell and still make big returns.
Here's the breakdown of our actual trades:
Entry Date
Exit Date
Return %
$10,000 Turns Into:

As you can see, these trades combined have led to a 724% gain so far... enough to turn $10,000 into more than $82,000 since 2012.
In short, when the trade went against us, we sold. And when the boom kicked in again, we got back on board. We left our egos at the door.
This is the strategy you need to use in China today. And yes, I do still like China...
But two things about China today tell me we need to be flexible about buying and selling...
1.   $400 billion is going to flow into Chinese stocks in the coming years. (That's not just my opinion. That's what MSCI, the leader in world stock market indexes, says. You can learn more about this from my recent DailyWealth essay here.)
2.   Peter Churchouse says we're in a bubble. Bubbles always end... but you don't know how much higher they will go, or when they will pop.

Based on these two points, the ride in Chinese stocks will likely be extremely volatile – and potentially extremely profitable – over the coming years. But we can't know that for sure. That's why I urge you to follow your trailing stops closely. Please sell when it is time to sell.
Keep in mind, the Chinese market can do crazy things... The CSI 300 index was at 2,000 at the beginning of 2007. At the end 2007 – just 12 months later – it was around 5,000. Twelve months after that, it stood at 2,000 again.
If you had followed trailing stops when investing during this time, you would have pocketed a triple-digit return. If you didn't, you wouldn't have made any money.
Today, we are in nearly the same situation... The CSI 300 index was at a little more than 2,000 a year ago. Today, it's at more than 4,000. Could it be down to 2,000 a year from now? That's exactly what happened less than a decade ago.
So you need to be willing to sell when you hit your stops.
Having said that, I believe Chinese stocks could surprise the entire world ON THE UPSIDE.
NOBODY outside of China is invested in Chinese stocks yet. One way to see the lack of interest in China is by looking at Internet searches from U.S. investors for the search phrase "Chinese Stocks."

The excitement isn't anything like 2007 yet. This is one indicator that tells me there's still upside in China – most people have not yet invested in Chinese stocks.
The ride in Chinese stocks over the next three years or so will be volatile... But even after the big gains we've seen, our upside potential is still significant.
For you to maximize your potential and minimize your downside risk, you must follow your trailing stops. And you must be willing to get back in once China begins moving higher again.
That was the key to 700%-plus gains in biotech. And I believe it'll be the key to enormous gains in China in the coming years.
Good investing,

Further Reading:

Earlier this month, Steve covered another one of his top ideas from his True Wealth Systems service. "Right now, we have one of the best opportunities in history to buy gold stocks," he writes. "This ratio is too extreme to ignore..." Learn more here: How I Made 995% in 2005... and Why Today's Opportunity Is Better.
Steve says most investors underestimate Asian countries. "You may be surprised to learn that Singapore and Hong Kong ALREADY have us beat," he writes. "Income per head in both Singapore and Hong Kong is higher than it is in the U.S." Get the full story here.

Market Notes


Today's chart shows that "selling the basics" isn't exciting... it just works.
Longtime readers know we're fans of simple businesses. Contrary to popular belief, you don't need to invest in complicated businesses to make money. Companies that sell the basics – things like soda, beer, and cigarettes – are often great long-term investments.
A good example of a "basics seller" is Anheuser-Busch InBev (BUD). It's the world's largest beer brewer. Its portfolio of brands includes Budweiser, Corona, Beck's, and Stella Artois. And it has a big "footprint" in many of the world's fastest-growing economies.
BUD isn't producing the "next big thing," but demand for its product is constant, as you can see in the chart below. Shares are up 100% over the last three and a half years and should only continue higher in the years ahead. After all, no new gadget is going to make having a beer after work obsolete.

premium teaser

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