This is how I win. I don't index. I don't hide in a basket of stocks, collect fees, and trust fate. I look for good set-ups, place sometimes over-sized bets and obsess over my picks like a protective mother. I scale my exposure up and down, depending on the market. And I do homework. An unreasonable amount of homework.
It's a frustrating way to invest. But, man, it's really satisfying when the plan comes together.
In December, I made Target my turnaround stock of the year. I got long Target via LEAPs then common stock, explaining my thought process along the way. Last month I told investors Target had gotten Back in the Game. Last week, in a member-only video, I made a Wish List for what I wanted Target to say when the company reported earnings and held its Investor Day today.
I wanted the company to get back to fashion and focus on improving the shopping experience, rather than Target's agenda. I wanted Target to refresh its grocery and expand its housewares. In other words, I wanted Target to get back to being Target.
And, to the point of our goal here, I suggested the stock would go much higher if the company did these things.
Today, Target reported a lousy quarter, gave cautious guidance, and detailed plans to do just about everything else on my list. The stock responded favorably in an otherwise horrible tape.
The Method to the Madness
Target shares are up over 20% year-to-date in an otherwise boring tape. Our LEAPs have gained 130%. Real trades, real money, a boring stock no one believed in 3 months ago. I find all of this unreasonably satisfying, especially the part where I share the process in real time with all of you.
Target gets an A grade for execution and an A+ just for sticking it to those who didn't believe. Congrats to everyone playing along in the name. This is the process. This is how to make money in stocks. It's bumpy and there's a decent amount of risk but, given enough time, it works.
