Dustin - How to Profit from the Next Bull Market

In the mid-nineties, I had the opportunity to work at one of Canadas leading discount brokers. I began by working in the firms call centre. It was a great place to start my career the learning curve was exponential, and it created the foundation that I have built the rest of my career on.

If youre not familiar with how a call centre operates, here are the basics. A licensed representative answers incoming calls from clients as allotted through an automated system. No client is assigned to a particular representative, and, as a result, each rep is exposed to hundreds of investors, each with a different account size and level of sophistication.

As time went by, I started to recognize trends, and I also began to notice certain common characteristics shared by the larger accounts. What was it, I wondered, that contributed to these investors success? What did they know that others did not? How were they different?

I observed that the accounts that were much larger than most all held similar stocks. Was I onto something? Some accounts were large, I knew, because of the success of an investors outside business activities, such as employment. These investors were important, but I was more interested in the investors who had made their wealth as a result of their own investment expertise.

Later, as I developed my skills further, I earned a position in the options queue. It was now the late nineties, and the technology bubble was just gaining momentum. What I witnessed on the options desk was even more incredible than what I had seen on the equity desk. Millions of dollars were made and lost in those few years. A select few investors cashed out their millions before the bubble burst, but the vast majority ended up losing their gains and having to give everything back. What was it, I wondered, that these few successful investors possessed? How did they know when to realize their profits?

Eventually, I came to learn the answers to these questions. For more than twenty years I have had the pleasure of working as a full-service advisor with all sorts of clients, including some making their first investments and some with multi-million-dollar portfolios. Along the way I have learned as much from them as they have from me.

I have always worked to keep their money safe. That is one of the two most important principles I have learned about making money: First, you need to make sure that you dont lose it. Second, it is essential to take risks. These principles may sound contradictory, but they can work together.

Let me explain: Im not talking about gambling; Im referring to disciplined, measured, calculated risks that have a high probability of success. Calculated risks also have the potential for generating asymmetrical returns, which Ill discuss in more detail later in this book. These types of opportunities present themselves only once in every market cycle.

How does the average investor take advantage of these opportunities? This is the question I will attempt to answer in the following pages.