What could you make? -50% to +500% every 3 years is the extreme. Or somewhere in between.
I’d recommend holding 4 of these stocks in a very highly speculative account. This isn’t Mutual Fund Investing. You have to risk bigger draw-downs (losses) to get the bigger gains.
Why 4? Good question. I came across a mathematical equation many years ago that proved if you had a system that made winning trades more than 60% of the time the best position sizing was a 4 stock portfolio. Yes..it can hit big draw-downs from time to time but it delivers the biggest bang for your buck. Will it make you a billionaire tomorrow..no sorry .Better go and join an M.L.M .scheme
Basically, invest in young, high growth stocks in high growth industries. Why invest in old, tired, slow growth stocks in dying industries?
Unlike most signals service that throw dozens of stocks at you every month I use my fundamentals screening to find the very young, exploding high growth stocks. I only invest/ trade across two industries and the criteria for buying is very strict. So strict, I only fine about 2-6 such stock per annum to invest in. I can many,many months with no new trades. That’s the reality of it.
And once in….you sit tight until I tell you to get out or the stock hits the target price. Bye the way the target price is $90 on each stock I give out and the entry is between $10 and $30. So there is a big reward/risk ratio.
We always get into the super growth stocks, the hot stocks (often much earlier than when CNBC is touting them).
Through out the years I got into stocks like:
TZOO,TASR,HANS (MNST) NTRI,ICE,CROX,DDD,TSLA
In the past year or so I gave out MOMO,AAOI,WB as my stocks all below $30. Hopefully they all hit $90 in the weeks/months ahead. But who knows.
Is this the Holy Grail? Nope. Sorry to disappoint. I have simply used all my experience to narrow down the chances of you hitting a super growth stock from all the crap stocks out there. I’d say about 70% end is some kind of profit with about 50%+ hitting the $90 price target. If you get into these stocks below $20 it can mean big profits.
After the 2008 meltdown I came across a Dr. from the USA that took a $50,000 to $5 million by trading in one stock at time. At first I called B*S* on this and asked him to prove it. And he did. Showed me his brokerage accounts. Kudos to him. He had nerves of steal especially when he went in over $1million on CROX and with 50% leverage. Holding through earnings etc. So there he was up at $5,000,000 on Halloween 2007. I remember the day well….I had a gut feeling it was going to be a real nightmare. I too was all in CROX from about $35. I think it hit about $80–$85 and earnings were being announced after the close. And voice in my head (strange i know emotions vs logic)) told me to get out. Everyone was convinced CROX would guide higher, beat expectations and the stock would gap up 15%+ and march upto $150+ it was nice to dream about future profits.
5 minutes to close and I was on the verge of selling out. But greed and fear had me. If I sold out now (with huge profits) I feared missing out on the 15%+ gap and march to $150. So I left it. Looking back I should have least taken some off the table or maybe even bought some put options …but greed.
About 30 minutes after the markets closed I check in on the price on YHOO. RED (down) about 12%. Ouch…that wasn’t supposed to happen. It clearly missed earnings then. There was no way i could get out. The markets were closed. Happy halloween!
So the next day I check in again. Down about 20% per market. I put a sell at the market order with my brokerage and sell right away. No waiting, no hoping, I got out. With about a 25% loss on one stock. Ouch…damm..that was painful Luckily I was still up big but I gave back a lot of profit. And the Dr. that was all in and had a value of $5million just 18 hours previous he was down to about $3million. $2 million loss in one night. Easy come, easy go. Still, had he have gotten out then it wouldn’t have been too bad (he would still have been up huge overall) but he convinced him-self the stock would rebound and held on…about 4 months later he gout out with about $2 million and quit. Turning $50,000 to $2million was still outstanding but I guess giving up $3 million crushed him? Emotion trumps intelligence all the time.
Any how…my point was I looked at all his trades and my own from 2003 to 2007 and I realised every big winner was this kind of stock in these two industries. Whilst going in one one stock is far too risky (not only risky trading but a risk you miss out on the best stocks) what it did show me was you should only invest in these kind of stocks, in these two sectors and ignore everything else.
I trade with no stop. So, in theory you could hit a 50%+ loss on one stock investment. I have sat through 50%+ corrections before the stock bounced back. It’s the weirdest thing because fundamentally there was nothing wrong with the stock. Nothing changed with the company yet the stock sells off 50%.It shows how crazy the stock market can be. It’s why i gave up trying to predict short term moves. IT CANNOT BE DONE. THANK ME LATER FOR THAT ADVICE. Every stock is different. Some hardly correct and march to $90..others can dip and saw and pause.
But, you can apply sound analysis and only invest in high probability, high reward stocks. In fact, that’s all you can do. Treat it like “angel investing” or buying into a business. No short term fixes or trade by the seat of your pants. You wait for perfect stocks in perfect set-ups that offer bug reward/risk ratio’s then enter with money you can afford to lose. (on one trade) and manage it. No second guessing. No jumping out on the first sign of a correction. No trying to smart and trading the corrections. You buy at $15, $20,$25….and simply see if it can hit $90 for an exit or until I tell you otherwise. If it dips (and it will) 30%+….you do nothing. No panic bailing out. No asking for advice. It can only really do one of two things. Profit or loss. IF it does end up a losing trade..you move on. If you want to win on every single investment..you are a dreamer not an investor.
Out of every 4 such investments 2-3 should work out with at least one huge winner (probably 2+ but even at one you’ll do well).
As for management I would say once in….switch everything off, never go on forums,blogs, etc asking for advice. DO NOT WATCH PRICES INTRA DAY. And manage the position once a week..or simply check for an email from me and do not even look at it until it is time to exit.
No need to waste your time or money on screeners, charting, newsletters, etc. In fact, all that will start making you second guess your-self and making snap calls. I hate watching the markets these days. Maybe burnt out from it. If your stock is up 7% today you are happy…if it is down 7% you are sad..worried. If it is flat you are frustrated. It is enough to drive you bonkers. That’s why I like managing the trades once a week and switching it off the rest of the time. It does you no good at all to watch prices. They are going to do what they are going to do if you watch or not.
Only two sectors traded.
Find one kind of stock that fits the criteria in the price range, buy it, hold until it reaches its target price and exit. Could take 10 months. Could take 3 years. That’s it.
Trade with no stop losses. Stocks have become more volatile and unpredictable than ever. Trading with stop losses will ensure you get kicked out on the corrections. I have sat through 50%+ draw downs on stocks before they recovered and hit their target.
Not many stocks to invest in:
You’ll probably find 2-4 such stocks a year. Most people can’t handle doing nothing. Rather be busy losing money that sit tight and making profits. We don’t have to worry about slippage, broker fees as we trade so infrequent.
Profits on a trade?
It depends where you gt in as the exit price is the same. Aim for 200% – 500% gains. Anything less than a 200% potential profit isn’t worth it.
You need to stop thinking about yearly returns and look at 3+ year returns. Year to year means nothing. The goal here is to invest in 4 stocks every three years and see where it takes you. Depending in market conditions this can be better or not as good.
2-3 years. Stocks simply do not move like they used to. Pre 2008 they would hit these targets in less than 15 months. Not anymore.
50%+ on each trade. No stop but if the stock does this get out. You can limit this by diversifying across a small number of stocks. Common sense…you are investing.
Let’s be 100% clear. Business is all about calculated risks. This isn’t the usual B*S* get rich quick. All business is about small profits but on huge revenues. Imagine an oil company like exon. They make about 8% profit. But on revenues of of over $100 billion…Not bad 🙂 Generally the bigger revenues you go the smaller your profit %. Common business sense right???? Smaller businesses bigger profits but smaller revenues.. Huge blue chip companies flip this around.
The only way you can make bigger profits in trading/business is to take on more risk. Just do it with money you can afford to lose and there’s no problem IF losing 20% scares the **** out of you just give your money to your I.F.A./asset manager and leave it alone.
Every 3 years…make 500% or lose 50%. Acceptable?
YES…contact me (email@example.com)
No way…good bye
When your average Hedge Fund returns 5.2% and charges hefty management and profit fees you need to be considering other options. You do know investing in a Vanguard index fund has outperformed almost every hedge/alternative/Private equity, hedge fund…over the past 40 years…just thought you should know this! The money management business is built on B*S*!
Past performance is no guarantee of future performance. There is a risk of loss. Trade with money you can afford to lose.