We get lots of interesting email here at the Fool. Just ask anyone who writes about Apple
Last week, I got an interesting message from someone not about an individual stock, but about my preferred investing method. Simply put, I look to buy companies cheap -- often when they're down -- and then sell them when others decide they're worth more, and bid up the shares accordingly.
This crazy school of investing has a name. We call it (please envision my finger quotes) "Value Investing." It's made billions for guys like Buffett, and it's done fine for small fish like me. Ask me about Nokia
But this guy had an even better idea: Ignore the company; watch the market. Here it is, in his words.
"If you are disciplined, you can make money by ONLY looking for 3% returns -- as long as you do 15 of those a month, you'll make 50% on your money MONTHLY. If you a little better, with 5% per trade, you'll double your money. Follow the chart."
Seems like a pretty good deal, no? Follow the chart; double your money every month. Of course, it ignores realities like losing a third or more of each gain to taxes, but we can assume a tax-free Roth IRA, can't we?
And let's take a look at just how great those returns would be. If you started with just a thousand bucks and doubled it that first month, you'd have two grand. Not too shabby. Double it again next month? Four grand. And so on.
My, how fast that money piles up.
In month 12, your Nest Egg would already be at $2,048,000. If you think that's great, wait until year three is up. By then, you'd have $34 trillion, or twice the value of all the stocks listed on the NYSE and the Nazz.
Oddly enough, this farcical "system" is suggested to me with surprising frequency, usually from folks trading in the likes of hot tamales like Travelzoo
Of course, if these people could trade like this, why would they bother trying to sell the know-how to you, much less give it away for free? Why don't they just collect their trillions and retire to their tropical islands?
Could it be that those easy monthly doubles are impossible?
For related Foolishness:
Seth Jayson is an advocate of investing like a grown-up, which means laying off the "easy money" and doing some work to look for values. His colleagues at Motley Fool Inside Value are on the same trip. A free trial is available.
Seth thinks a double in 12 months is pretty good, but he's old-school. At the time of publication, he had shares of ATI but held no position in any other company mentioned. View his stock holdings and Fool profile here. Fool rules are here.