Hello Reader,

Got quite a few messages about the email I sent you the other day, which showed me that plenty of you are frustrated by the market too.

In case you missed it, I talked about how you don’t have to chase bubbles to get the returns you want, despite the fact that stupid trading has been rewarded for a while now.

And I said… look for stuff that is out of favor.

How do you do that? Well, tomorrow I’m going to tell you how you can invest in out-of-favor stuff that has a lot of upside and go after profits without blowing yourself up… all while staying away from the investing herd. 

But today, I want to tell you a bit about my trading philosophy/strategy, which I don’t often talk about.

Let’s Start Off with My Number One Rule of Trading:

1) I have no rules of trading.

But… I do have guidelines:

2) I don’t make a habit of adding to losing positions.

3) I do make a habit of adding to winning positions.

4) But I also often don’t do those things.

5) Sometimes I buy the most horrible looking charts in the world. And I have a pretty good track record of being right in those situations.

6) I always try to confront my own biases.

7) I don’t have any stop losses, because I believe that all stops are meant to be elected.

8) Most of the time I have an idea of where I will close a losing position. Sometimes I don’t.

9) I have found that most people who are religious about cutting losers are also pretty good about cutting winners.

10) You can tolerate a few screw-ups here and there if you play for the really big win.

11) But most people don’t play for the big win. You have to pick up a lot of nickels to become a millionaire. All it takes is for me to have one really good idea.

12) If you want to read more about my trading philosophy, I pretty much agree with Stan Druckenmiller on everything. Especially when it comes to diversification. Or non-diversification, as it were.

I’m not saying you should rip up your own playbook and start following these guidelines religiously. I don’t follow them religiously.

I’m saying maybe think about how you can apply some of them to how you invest. I’ve been in this game for more than two decades (and winning), so I’m doing something right.

These are the kind of guidelines that resulted in me putting a 50% gain on Macy’s, a 20% gain on Transocean, and a 40% gain on Steel Dynamics on the scoreboard… this year alone.

(Important note: I’m out of those positions—they are not recommendations).

I’m also not saying it’s easy. You rarely succeed as an investor by doing what everyone else is doing, and that can be a lonely position to be in. Tomorrow, I’ll tell you exactly how I can help.

Jared Dillian

P.S.– Thoughts, comments, questions about my trading philosophy? Send them into me right here.