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Cabot Sector Xpress
Cabot Sector Xpress Club
Here are some questions members often ask our analysts or make an important point. It’s a good place to look first if you need an answer to your own question.

What is the best way to safely invest in marijuana stocks?

Timothy Lutts:

Practice the number-one rule of successful investing—diversify. And don’t overload your portfolio with marijuana stocks. At this point, 10% allocated to marijuana stocks may be plenty.

Invest in sync with the trends of both the broad market. Be aggressive when trends are up and hold more cash when trends are down.

Employ all the usual risk-reduction strategies. Diversify your buying over time, buy on dips, consider taking partial profits when stocks are extended, and, of course, cut losses short.

What types of metals do you cover in SX Gold & Metals Advisor?

Clif Droke:

We cover both major metals groups—precious and base—including gold, silver, platinum, palladium, copper, zinc, iron, nickel steel, aluminum, uranium, rare earth minerals and more.

What is ESG investing?

This is a transaction in the financial market in which the investor selling call options owns the equivalent amount of the underlying security. To execute this an investor holding a long position in an asset then writes (sells) call options on that same asset to generate an income stream. The investor’s long position in the asset is the “cover” because it means the seller can deliver the shares if the buyer of the call option chooses to exercise. If the investor simultaneously buys stock and writes call options against that stock position, it is known as a “buy-write” transaction.

Do you recommend using stop-loss orders on the trading positions mentioned in your newsletter?

Clif Droke:
We always provide stop-loss recommendations (i.e. price levels) on every trading position recommended in the newsletter. Most of the protective stop orders are recommended as closing basis, though in a particularly volatile stock we sometimes recommend intraday stops. But stops should always be used on every long position in an individual stock or ETF in order to limit losses in case of unforeseen volatility. Also, we advise raising stops whenever our trade recommendations show profits in order to lock in those profits.

Why is it important to take partial (or half) profits on the trading positions you recommended in the SXGM report? I notice that not all analysts make partial profit-taking recommendations.

Clif Droke:
When you’re trading in a sector as volatile and cyclical as the base and precious metals, it’s imperative to not only employ protective stops when trading, but also to take some money off the table whenever your position shows a profit of at least 10% to 15%. This is because metal stocks (and other commodity stocks in general) don’t typically trend higher in a sustained fashion like other (non-commodity) sectors. Thus, it’s essential to lock in profits and raise stops along the way in order to ensure profits in the metal stocks.