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Wednesday, March 3, 2010

ONE OF THE GREATEST UPTRENDS IN HISTORY

Today's chart displays one of the best investment "systems" you'll ever find.

Before we reveal the system, remember: many things the average investor believes are investments are not investments at all.

A home is not an investment. It is a consumer item. Gold is not an investment. It is money... a store of wealth. Stock in a gold-mining company is not an investment. It is a speculation. Now here's the system...

Health care giant Johnson & Johnson has all kinds of attributes the rich investor demands from an investment. The company owns a suite of world-class brand names, like Listerine, Band-Aid, Neutrogena, Splenda, Rogaine, and Tylenol. It earns high profit margins. It sports a bulletproof balance sheet. And its dividend payout ranks second in consistency to the rising sun. The rich investor, after all, demands you pay him for the privilege of using his money.

Below is the past 15 years of trading in J&J. It's one of the greatest uptrends in stock market history. This uptrend is only interrupted by major weakness in the broader market (2000, 2002, 2008). If you had bought after each of these market selloffs, you'd have made immediate short-term gains... and then participated in the long-term uptrend. Put another way, this system, just like our "trophy asset" strategy, says when a world-class investment goes on sale because of widespread public fear, buy as much as you can.

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