American Capital Agency Corp. (AGNC): The Only Time You Should Ever Buy A Stock Yielding 17%

So just to review, if you had followed this strategy and waited to buy American Capital Agency Corp. (NASDAQ:AGNC) when relative strength was above 70 in May 2012 (capturing its 17% yield at the time), and held on to it until September (when relative strength fell below 70), you would’ve pocketed a total return of 17% just before the stock took a downturn.

By contrast, investors who happened to buy the stock in May 2012 and didn’t follow the signal to get out would be sitting on a 11% loss right now. Even worse, if they bought near the peak they’d have a 33% loss.

That’s why I think using relative strength is the only way to ever buy a high-yield stock — or any stock — safely.

All of this is proof that if you aren’t using trading signals in your investing, then you’re missing one of the most important tools to beat the market.

Now, I will be the first to tell you that one example doesn’t prove a system works.

That’s why I want to tell you about a special research project I’ve completed that puts this tool to the test.

For the past several weeks, I’ve been testing a system that uses a few simple trading signals (like relative strength) and applies them to the stocks that are currently held within the various StreetAuthority portfolios. These are the same stocks held by Carla Pasternak, Amy Calistri, Elliott Gue and Nathan Slaughter… and that you may already own.

From there, I rank every single holding, top to bottom, filling a portfolio with up to 10 stocks that rate the highest. The results are very encouraging. During the past 10 years my test is showing a gain of 21.5% per year versus a roughly 7% annual rise in the S&P.

I call it the “Maximum Profit” system, and it’s perfect for income investors. Nearly two-thirds of the stocks that I look at pay a dividend, and roughly one-third of the stocks that are potential buys have a yield over 4%. And by using trading signals and other fundamentals, my dividend payers enjoy added protection that doesn’t come with traditional investing.

To learn more about this research, I encourage you to watch this presentation. You don’t want to miss this opportunity.

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