Stephen’s note: Today, I’m stepping aside to let our new analyst John Pangere explain how warrants became such an important part of his personal portfolio.
He’ll share how his grandfather’s old-school “coffee can” philosophy shaped his investment approach… and why he believes warrants are one of the most overlooked tools in the market.
Also, John just made a new warrants education hub available. It’s loaded with free bonus reports and more explaining how warrants work, and how to trade them. Click here to automatically unlock access to all the free bonuses.
***
Growing up, I remember sitting with my grandfather looking through stock tables in the business section of the local newspaper. He used to call out a name for me to search.
“US Steel,” my grandfather would say.
“50 and an eighth,” I’d call out.
“General Electric.”
“102 and three-quarters!”
This was one of my first introductions to the world of investing. And I learned a lot from those days going through the stock tables with my grandfather.
I learned how saving is the first key to building wealth. Then how investing and compounding will help you grow that wealth.
Armed with this knowledge, I stumbled upon a very lucrative corner of the market… one most investors have never even heard of. My subscribers have had the chance to book winners as big as 614%, 2,174%, and even 4,947%.
If you’ve been following along, you know I’m talking about warrants. Today, you can decide whether warrants belong in your portfolio. And I’ll show you how to get started. But first, some background…
My grandfather was a conservative investor. And knowing my family’s history, it’s easy to see why.
He was born in Greece at the outset of World War I and grew up in a 10-by-10 house with a dirt floor. There was no electricity. No plumbing. No luxuries of any kind.
That frugality also spilled over to his investing style.
His investing style was a lot like the famed “coffee can” portfolio.
You might have heard about the concept before. Robert Kirby, a former portfolio manager at Capital Group, made it famous. He wrote about it in The Journal of Portfolio Management in 1984.
The idea is simple. According to Kirby, the concept comes from the Old West when people used to put all of their valuables in a coffee can. They hid the coffee can under a mattress and sometimes forgot about it.
Kirby showed that you could apply this concept to your own portfolio. The way it works is you put together your favorite stocks. Sit on them for 10 years or more, then dig out the “coffee can” to see your results.
The tough part for most investors is the waiting. It’s hard to do nothing when you have instant information at your fingertips. But this type of investing can work well over the long term for your core holdings.
I know this from personal experience. In my own portfolio, I have a core set of investments where my time horizon is decades, not months or just a few years. It’s a great way to compound wealth over time.
However, I veer off from the coffee can mentality in one big way…
I take a small portion of my investable assets to speculate with. That includes things like private placements and small, tiny stocks that have a chance to earn multiples of my money in a short period of time.
So far, these speculations have helped me turn small sums into small fortunes. Sure, I’ve had some misses. But overall, they’ve added vastly more to my wealth than not.
It works because I have a core portfolio that I’m confident will continue compounding over time. But the speculations give me a chance to take my wealth to the next level.
And, out of all my speculations, warrants are proving to be one of the most lucrative of them all…
A stock warrant is a security that gives the holder the right (but not the obligation) to buy a share of stock at a fixed price. That sounds a lot like options, but they’re far better.
They usually expire anywhere from three to five years instead of months. You can buy and sell them just as easy as a stock… and you don’t need any special permission from your broker.
|
The advantage to speculating with warrants is the leverage you get to a rising stock price. So if a company’s stock is up 100%, the warrants might be up 200% or more over the same period.
That’s one reason I love speculating with warrants. In fact, my ideal speculative portfolio would consist mainly of warrants. I like to call it a “speculative” coffee can portfolio.
Warrants are not long term. But just like the coffee can portfolio, you can speculate on a warrant and let it run. You can almost forget about it. Months or even years later, you open the can and have likely vastly increased your assets.
The great thing is that you don’t need to bet the house on any one warrant. Owning a basket of them is the smart move.
And it only takes a little to make a difference. In fact, I never speculate with more than I can afford to lose on any one position. That’s the key to successful speculation.
Over the years, I’ve cashed out with 10X or more gains a number of times all using warrants. And I’ve seen plenty of triple-digit winners.
But it’s not just my personal portfolio that’s benefitting…
Back in 2019, I decided to bring the power of warrants to everyday investors just like you.
I wanted to break open the secrets I’ve used personally to profit from this corner of the market, so readers would have the chance to do the same.
Since then, I’ve recommended more than 80 different warrants in my premium service, Strategic Trader. Our subscribers have had the chance to book winners as big as 614%, 2,174%, and even 4,947%.
The best part is that you don’t need a large amount of money to reap the upside warrants offer.
They’re a great way to complement your personal “coffee can” portfolio… and they can make a huge difference on your way to financial freedom.
You may have heard that I’m bringing my Strategic Trader advisory to RiskHedge.
To help you understand exactly how warrants work—and why I believe they’re such a powerful investing tool—we’ve created a dedicated education hub for readers who want to learn more.
Inside, you’ll find two special reports that explain warrants in plain English… and walk you step by step through placing your first trade using a regular brokerage account.
I’ve also put together a simple Warrants Cheat Sheet that clearly lays out the difference between warrants, stocks, and options.
Don’t worry if this area of the market is completely new to you. My goal is to make it approachable and easy to understand, so you can decide for yourself whether warrants belong in your portfolio.
If you’d like to access the hub, go here.
More soon.
Regards,
Director of Warrants, RiskHedge