“I am a long-term investor. How do I handle the market volatility?” This is the question I am asked most often these days. I will illustrate with three stocks from one of The Arora Report portfolios, including where to buy them, how to buy them and where to take profits. This portfolio has over 50 positions. Out of these positions, the top 10 are the core of the portfolio, are meant to be held for three plus years, and partial profits are taken on up spikes and additional quantities are bought on down spikes. This way we are always taking some profits when the market is high and always buying when the market is low. American International Group Inc.AIG, -1.66% is a large insurance company that would have gone bankrupt during the 2008 financial crisis if it was not for the bailout by the Federal government. AIG was one of the preeminent and most well managed insurance companies in the world. It just had a small rogue division that caused the havoc. Ever since the bailout, I was patiently waiting for the right time when there would be enough hard data to know that majority of the risk was behind us and only rewards were ahead. The chart linked above shows the initial entry. It also shows various times when additions to the position took place and when partial profits were taken. From the chart, just make a note of the buy zone shown by a rectangle on the right-hand side. This buy zone is derived by proprietary algorithms of The Arora Report and has about 70% probability of the stock falling into this zone over the next three months. Please note that the midpoint of the buy zone is 16% below the price as of the time of this writing and the low point of the buy zone is 21% below this price. The foregoing plan takes the emotion out when the market dips and/or AIG dips because the investor is ready to buy at a much better price than the current price. Now notice the target zone shown on the chart. The high point of the target is $85; this is an over 100% gain from the midpoint of the buy zone in about three years. This target may prove conservative. The book value of AIG is $77.35. The book value of AIG should continue to rise. In good times, it is common for insurance companies to trade at 20%-30% over the book value. Walgreens Boots Alliance Inc. WBA, +0.18% is a major drug-store chain. I had concluded earlier that Walgreens would be a major beneficiary of Obamacare. I was patiently waiting for an opportunity to buy. Near the peak of the European sovereign debt crisis, Walgreens decided to buy a major stake in a European drug-store chain, Alliance Boots. Wall Street analysts uniformly condemned the buy. Their thesis was that Europe was falling apart, why invest such a big amount in Europe? To me, Walgreens had made a brilliant move. Irrespective of what would have happened in Europe, I felt pretty confident that Europeans would continue to visit drug stores. Wasn’t the best time to make a major purchase when the price was low? My answer was a “yes.” To me, Walgreens’ move was a brilliant one. The stock fell due to analysts downgrades. This provided an opportunity to buy the stock as shown on the chart. Last year, bad earnings due to temporary factors gave another opportunity to add to the position. The chart shows the new buy zone and the target zone. Any bad news in this stock is likely to be temporary in its effect and thus is likely to provide a buying opportunity. The portfolio held U.S. Air, so when U.S. Air bought American Airlines Group Inc.AAL, -0.29% out of bankruptcy, AAL came to the portfolio. There are significant merger synergies still to be realized. For this reason, dips in this stock will be buying opportunities. The chart linked below shows the zone to buy on a dip and the target zone. The biggest expense of airlines is fuel. The dip in oil prices has provided a tailwind for airline stocks. However, oil is not going to continue to go down in a straight line. Oil will often have countertrend up moves. During such up moves, Wall Street will sell American Airlines providing opportunities to add to the position. Conversely, during down spikes in oil, Wall Street will buy American Airline and thus providing opportunities to take partial profits on strength in the stock. Disclosure: Subscribers to The Arora Report have positions in AAL, AIG and WBA. Further, buy zones and target zones are reviewed daily and may be revised without any notice. Nigam Arora is an engineer, nuclear physicist, author, and entrepreneur and the founder of two Inc. 500 fastest growing companies. He is also the developer of the ZYX Change Method to profit from change by investing. Arora is the chief investment officer at The Arora Report and the editor of four newsletters that track the ZYX Change Method.