Three ways to get rich in the stock market

Money Credit: Getty Images Be smart about your money and you might turn thousands into millions, too.
Credit: Getty Images
I turned a few thousand dollars into a few million dollars; then I turned several students into millionaires, too. Now, people always ask me for stock picks.

Rather than give out stock picks, though, I prefer to teach people a replicable strategy – it’s better to teach a man to fish, right?

Here are the basics on how my students and I beat the market year in and year out.

As you read my advice, don’t be shocked if my tips go against conventional investing wisdom. If you want to get rich in the stock market, you can’t do what everyone else is doing.

1. Never go for home runs

No matter what your favorite kind of stock is, whether it’s a technology stock like Google or Facebook, blue-chip companies like General Electric or Bank Of America or any of the many smaller, speculative companies, learn to take 10 to 30 percent profits when you have them, and don’t go for the lower odds of 100 percent-plus wins.

Even though it feels great to have a big winner and compound those gains by holding for years, by aiming for home runs, you often strike out and fail to grow your accounts by taking solid, if not spectacular, profits when you have them. After some initial glory, too many people hold on too long and feel “married” to their investments, so their gains turn into losses.

2. Find stocks with positive, meaningful news

Most companies have enticing overall stories and interesting products, but I find stocks which have had hugely positive news recently, like better than expected earnings, a new contract with a large company or a successful product launch, rise faster than the rest because meaningful news has “legs” that can influence a stock for weeks or even months.

Going back to the first tip, though – if you have a solid profit after a few days or weeks, don’t be afraid to take it.

3. Don’t diversify: Invest and trade like a sniper

Safety in numbers is nice, but it also prevents you from growing your account too quickly the way my students and I have done. Instead of investing in five to 10 stocks, I usually only have one or two at any one time because like a sniper, I aim small, miss small and when I’m right, I hit my target and move on.

I’m not saying go “all in” on any one stock; I just use a small portion of my account on one or two stocks when they have meaningful and positive news, and I aim to make 10 to 30 percent on my money.

Do this again and again, even if you lose sometimes, and you will beat the stock market like my students and I do.

This week’s picks:

1. I love the FTC coming down on Dr. Oz who has pitched far too many “miracle cures” during his time in the spotlight; we need more light shined on internet products.

2. I listened to a few awesome interviews on Secret Entourage, a motivational website for entrepreneurs and people in startups.

3. Team USA might have tied with Portugal, but I still have hope! Their win against Ghana was inspirational and I’m keeping my fingers crossed.