Sam Seiden
Independent Analyst
Walmart, Tesco, Costco, Sam’s Club just to name a few, these are some of the biggest retailers in the world; huge operations that make fortunes in revenue. How do they do it? What is their big secret? Simple, at the end of the day they have simply mastered the skill of buying at wholesale prices and selling at retail prices. Wait, this is supposed to be an article on investing so why write about the retail world of gadgets, clothes, appliances, toilet paper and more? It’s an important topic if you want to understand how to be a successful investor. When you look at the buying and selling actions of the major retailers in the markets they operate in, they are no different than the actions of the successful investor. So, if you’re looking for more income or wealth and thinking of starting a retail business, you may want to think again and consider a path that may be much easier. The difference is that the average investor can do all this from the comforts of their own home.
Let’s get more specific with these actions so that you can become a better investor by the end of this article. For Walmart to profit they have to make sure that there are many willing buyers to pay the retail prices they are charging. When we invest, we must do exactly the same thing. We need retail buyers who are willing to buy at the retail (supply) price levels we are charging when taking profit on an investment that we bought, whether it be an up or a downside move in the market. Take the example below from a recent opportunity found using the Daily Market Overview, one of our daily services for members. In the session, our XLT instructor identified a supply level in the oil market. This is a price level that, according to our rule based analysis, had much more willing supply than demand. Another word for a supply level is “retail.” Next, price rallied up to our pre-determined supply (retail) level which means people were convinced that oil was worth buying at our retail price. After they bought, price declined as it should and we were able to buy lower, profiting from this move.
Again, this is really no different from paying extreme retail prices for a new car. As soon as you sign the papers and drive it off the lot the price declines dramatically. The first step in this process is to accurately identify key supply (retail) prices in a market. The second step is to wait for someone to buy from you at that level. Just like people walk into Walmart each day and pay retail prices; people will be more than willing to pay your retail prices in the markets. This is because most people buy on good news and in strong up trends. In both cases, they are typically buying at or near retail prices.
Oil Market – April 21st, 2015
Take a good look at the chart and specifically at the supply level and then the rally into it followed by the decline. That picture is the same picture of price movement if you were to buy something at Walmart and then try to sell it at a garage sale at your home. You are going to sell it for a much lower price than you bought it for at the store. Whether we are talking the oil Market or a Walmart product, the chart is identical. Just like the retail store, you must know what retail price to sell at (supply levels) and you must have the patience and discipline to wait for someone to be willing to buy at that level.
You really do have your own retail business going at your home if you think about it. Smart investors know price levels that are too low (demand/wholesale) and price levels that are too high (supply/retail). They buy at wholesale prices from people who are conditioned and willing to sell at wholesale prices. They also sell at retail prices to buyers who are conditioned and willing to buy at retail prices. Then, they just repeat the same simple process over and over for their entire life. Those who pay retail prices in the markets create wealth for Wall Street. Those who pay wholesale prices create wealth for themselves. Another way to say that: Some people create their own pension from the financial system; others create it for Wall Street. Who are you?
Hope this was helpful, have a great day.
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Editors’ Picks
EUR/USD hits two-day highs near 1.1820
EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY drops back below 157.00, as focus shifts to Japan snap election
USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the US Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. The preliminary reading of the Michigan Consumer Sentiment Index report for February will be released later on Friday.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates Premium
The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
Gold: Volatility persists in commodity space Premium
After losing more than 8% to end the previous week, Gold (XAU/USD) remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000.
GBP/USD: Pound Sterling tests key support ahead of a big week Premium
The Pound Sterling (GBP) changed course against the US Dollar (USD), with GBP/USD giving up nearly 200 pips in a dramatic correction.
Bitcoin: The worst may be behind us
Bitcoin (BTC) price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
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