Over the past 90 years, the S&P 500 has delivered an average annual return of just under 10%. Of course, some years have been much better, while others have been far worse.
On a compounded basis, a 10% annual return would double your money in a little over seven years. Over 25 years of compounding, you’d end up with 10 times your original investment.
That’s why professional investors are so patient. They know the occasional stock market correction will not prevent them from achieving their long-term goals.
But what if I told you there is an easier way to earn 10% profits in the stock market? A method that relies very little on growth and instead focuses on income.
Here’s how it works.
Gaining Energy
To show you how this method works, I’ll use energy conglomerate The Williams Companies (NYSE: WMB) as an example. I owned WMB in one of the trading services I manage and wanted to squeeze a little more return out of it.
Three months ago, WMB was trading around $26. The price of oil was below $55 and the stock market was just starting to recover from a third-quarter correction that drove the S&P down 20%.
Energy stocks got hit particularly hard during the stock market’s year-end fade. From its August high above $32 to its December low below $21, Williams lost more than a third of its value in just four months.
However, by the third week of January, WMB had already recovered half that loss and had established a lot of upside momentum. That’s when I decided to make my move.
