Warren Buffet’s #1 Rule of Not Losing Money in Stocks
They’re one of the most exciting parts of investing.
The moment when you knock it out of the park and walk away with a huge return.
It doesn’t always happen. But when it does, it feels great. It has you seeking that feeling with every trade you make.
There’s just one problem.
If you are desperately searching for that next home run trade, you will keep striking out.
The better way to invest, at least for the largest chunk of your funds, is to look for consistent gains that continue to build your wealth over time.
By focusing on getting constant gains, you are following in the steps of legendary investor Warren Buffett.
Do you know what Warren Buffett’s No. 1 rule is when it comes to investing?
It’s to never lose money.
One strategy that I use has a 100% win rate, meaning it hasn’t lost money since January of 2015 — nearly a three-year period.
Grabbing Win After Win
Warren Buffett’s No. 1 rule when it comes to investing is to never lose money. His second rule is to never forget rule No. 1.
This is pretty powerful advice coming from one of the greatest investors to have ever lived, and it’s something I take to heart when it comes to the strategy I use in Pure Income.
The goal with Pure Income is to generate consistent returns and limit our losses — and it has been flawless for over two years.
A 100% win rate means we haven’t closed a position for a loss when following our core, income-producing strategy — just grabbing win after win.
The key behind these consistent gains is in the strategy I utilize, which is that we sell to open put options.
Selling puts allows you to generate a steady stream of income before you ever purchase a single share of stock. It’s a strategy Warren Buffett has constantly used as well.
Here’s how it works.
A Unique Strategy
Instead of buying the stock upfront, you are agreeing to purchase shares if they fall below a specific price level that you pick — and you get paid to take this agreement.
So regardless of the outcome, you still keep the income you collected to begin with.
Once you place your order to sell to open a put option on stock, only two outcomes are possible.
- You end up owning the stock.
- The option expires worthless, meaning that the price of the stock stayed above our strike price and you didn’t get a chance to own the shares.
In either case, you keep the income you collected.
That’s how I’ve been able to go nearly three years without a single loss, and I did it with readers in my Pure Income service.
So the next time you hear an investor say no one can follow Warren Buffett’s No. 1 rule and never take a loss, you know that it is possible. You just have to know which strategy to use.
To learn more about this unique strategy that has a 100% win rate since January 2015, click here.
Chad Shoop, CMT
Editor, Automatic Profits Alert