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Frequently Asked Questions (and Answers!)
Each week we receive dozens of astute inquiries from subscribers.
Many questions concern our Pinnacle trading strategy… others seek clarification on our portfolio positions… and some ask about our exit strategies.
To share my best guidance with all subscribers, I’ve put together a roundup of frequently asked questions below.
With each one, you’ll find a detailed response from me.
I strongly encourage you to review this Q&A when you have the chance. I think you’ll find it to be extremely useful.
Remember, if you have any feedback for me, please don’t hesitate to reach out. I’m always striving to deliver you the best possible experience.
You can email my team by clicking here. Or you can always call them at 866.237.0436.
Where does Fry’s Pinnacle Portfolio fit within The Oxford Club Wealth Pyramid?
For those of you who are new to the Club, you may be wondering what the “Wealth Pyramid” is. In short, it’s the Club’s asset allocation model. It looks like this:
(If you’re not familiar with it, you should read up on it here.)
Fry’s Pinnacle Portfolio falls within the “Targeted Trading” section of the Pyramid. This area of the model is aimed at helping you take advantage of what we call “unique market circumstances.”
These are scenarios where big gains can be made… but they’re generally reserved for more sophisticated investors and traders. In Fry’s Pinnacle Portfolio, we use my Pinnacle System to identify and exploit these types of opportunities.
The “Targeted Trading” section of the Pyramid is further divided into three subsections (ultra-short term, short term and long term). Our service falls within the “short term” category given the relatively short to medium hold time we’ll observe for most of our trades.
Will Fry’s Pinnacle Portfolio focus primarily on options trading?
No. In this service, I will recommend a mix of stocks, ETFs and options.
Our approach includes all three types of investments to dampen volatility and achieve maximum diversification and stability. This basic concept is called “trade structure diversification.”
Understanding why we use this strategy is very important. In fact, there’s a chapter devoted to it in my report, “The Pinnacle System: How to Beat the Market by 10X.” (Make sure to read it if you haven’t already!)
Right now, our portfolio includes three stocks and four call options. Over the long term, I will aim to deliver an equal amount of stock and option trades.
If you’re hesitant about options trading, or unclear on why we use options, please read my “Trading Blueprint.” It provides a detailed explanation of our options approach in Fry’s Pinnacle Portfolio. It’s easy to read, and you’ll find it very helpful.
Also, make sure to watch this introductory video I put together. In it, I explain more about the difference between our “Investor’s Portfolio” and our “Speculator’s Portfolio,” the latter being where options trades are recorded.
When you exit a position, will your decision be the result of a target gain being achieved or a target duration being met? Or a combination of both?
Philosophically, I do not believe in targeting a specific return on an investment.
Instead, I target the best available opportunities and then let each trade’s momentum and fundamental developments dictate our exit.
In most cases, the decision to exit a position will result from one of three factors. We will
- Proactively take profits, either because a trade’s momentum is fading or simply to capture gains to fund future investments.
- Proactively exit the trade – no matter whether it is profitable or unprofitable – because the fundamental rationale for entering the trade has changed materially.
- Reactively exit the position because it has hit a predetermined stop-loss limit.
What kind of holding period should I expect for these trades?
Each trade will vary. But generally speaking, half of our trades will be held for a period of six to 18 months.
Roughly a quarter of our trades will have a longer duration, and a quarter of them will be held for a shorter time frame.
The best way to think about it is with a bell curve visual like this:
There is no such thing as a one-size-fits-all approach to portfolio construction. The correct mix of “investor trades” and “speculator trades” depends upon your personal risk appetite.
The greater the risk you wish to assume, the more you will want to focus on “speculator trades.” The opposite is also true. The less risk you wish to assume, the more you will want to focus on “investor trades.”
But no matter which makes of trades you pursue, be sure to stay well inside your comfort zone. By doing so, you will have the staying power to stick with your trades… and give them time to succeed.
How many new recommendations do you expect to issue each month?
In general, I’ll be issuing one to two new trades per month.
But opportunity doesn’t follow the Gregorian calendar. Sometimes a large number of opportunities present themselves during a very short time frame. During moments like these, I may issue several recommendations in a short period of time.
Other times, compelling opportunities may be few and far between. During those periods, I may issue no new recommendations for several weeks. Nevertheless, I will continuously monitor all of our trades and provide timely updates about any important developments.
In the future, how many open recommendations do you expect to hold at a given time in the portfolios?
Typically, I will maintain between 12 and 18 positions in our “Investor’s Portfolio” and an additional 12 to 18 positions in the “Speculator’s Portfolio,” depending on market conditions.
However, many of the positions in the two portfolios will be closely related to one another. For example, the Investor’s Portfolio might hold an ETF like the iShares Latin America 40 ETF (NYSE: ILF), while the Speculator’s Portfolio might hold a call option on that same fund. These two positions would not be identical, but they would be related.
So if we consider related trades as a play one specific investment idea, then the combined portfolios will typically maintain between 18 and 24 specific investment plays, depending on market conditions.
I’m a new subscriber, and it seems that many of your recommended positions are trading outside of buy range. Should I buy them at their current prices or wait?
My answer to this question is an emphatic “No.” I do not recommend “chasing” a stock or an option that has surpassed the “buy up to” limit. I suggest the same approach for a short sale recommendation, except opposite – i.e., do not chase it below the limit I set for selling the stock short.
If for any reason the stock or option is trading outside of the limits I have set, I suggest taking no action at that time. Either wait for a correction that pulls the stock into the “Buy” or “Sell Short” zone… or wait for the next opportunity in a different stock or option.
The reason for observing a strict “Buy” discipline is simply that; it is a discipline. And during my decades as a professional observer, I have observed that discipline is essential to the success of any investment strategy.
In fact, discipline may be even more important that the exact strategy itself. For example, even though “buying low” is generally more successful than “buying high,” I have observed that a disciplined momentum strategy that focuses on richly priced high-flying stocks is more likely to succeed than a haphazard strategy that buys lowly valued stocks.
I’ll be sure to share more questions and answers in the coming weeks and months.
Good investing,
Eric Fry
Editor, Fry’s Pinnacle Portfolio