Tuesday , 27 September 2016


“Home Run” Style Investing: Here’s How to Improve Your Chances

Most “home run” investments evolve over time. Rarely do they happen overnight. Investors have to put themselves in the right position to “get home” by getting off to a good start with the investment to begin with. This, along with a little luck, dramatically increases the chance of a big winner. Here are seven recurring themes to such “home run” style investing. Words: 640

So writes Tyler Laundon (www.wyattresearch.com) in edited excerpts from his original article* entitled Tips To Help You Achieve Big Market Gains.
This post is presented compliments of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds), www.munKNEE.com (Your Key to Making Money!) and the Intelligence Report newsletter (it’s free) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Laundon goes on to say in further edited excerpts:

A lot of small-cap investors ask how they can find those elusive “home run” stocks. The first answer I give them is simple. I say, “First you need to get on base. Then worry about getting home.”

The point is that most “home run” investments evolve over time. Rarely do they happen overnight so investors have to put themselves in the right position to “get home” by getting off to a good start with the investment to begin with. This, along with a little luck, dramatically increases the chance of a big winner.

That all said, there are some recurring themes to “home run” style investing that do help your chances…

  1. Invest in misunderstood or undervalued stocks that have significant exposure to a major growth trend or catalyst. Pretty simple place to begin, right?
  2. Find those companies that are benefitting from a big, long-term trend and that are doing something unique, better or faster than others that make them the most compelling opportunity – and you want to get to them before the rest of the crowd….
  3. [Identify] a few specific catalysts that’ll help propel the stock higher. You’ll figure these out with in-depth research into the company’s market, its financials and its services or products. These catalysts don’t need to be fancy. They can be a new product, a restructuring of debt, expected dividend growth, turning the corner to profitability, any number of things.
  4. Anticipate the catalyst and understand the link between the event occurring and the effect on the share price.
  5. Armed with all this knowledge, put together an investment thesis and follow the stock for a bit. If it still looks good and the price is right, it’s time to buy.
  6. Buy in tranches. This keeps the risk of buying at a peak under control. And once you own a stock, you tend to watch it a lot closer. This reinforces your knowledge of how it trades and helps you understand when it’s time to buy more or sell.
  7. Sell when valuation gets completely unreasonable or the catalyst you anticipated occurred and your investment thesis has run its course. You can sell either the entire position or just part of it, depending on your confidence in the stock. On the downside, keep a stop loss in mind – usually I’m looking at around 30-35%. If I’m down that much, I’ll usually get out of the position.

Further, remember that winning stocks do well for a reason. History suggests that the best quality stocks run longer and higher than many investors expect. To help you stay the course with winners you must understand the fundamentals of the company…Any changes to the story – good or bad – mean re-considering your thesis. As long as it remains intact, stick with the company and keep yourself in that position to get a little lucky and capture that outsized gain.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://www.wyattresearch.com/article/tips-to-help-you-achieve-big-market-gains/29652 

Disagree? Concur? Have your say on the subject via:

We’d like to know what you have to say.

Related Articles:

1. Using a Momentum Investing Strategy Is the Way to Go – Here’s Proof

In volatile markets you must be able to go to cash when markets become dangerous. That is exactly what the momentum selection model does well. It protects your capital on the downside and enables it to grow on the upside! If you insist on staying in the stock market at all times, even perfect foresight cannot protect you. The ability and willingness to periodically run away beats the macho strategy of holding on.

2. Momentum Investing: Ride the Market Waves to Big Profits

It is hard to know what to buy or sell let alone just when to prudently do so. Thank goodness there are indicators available that provide information of stock and index movement of a more immediate nature to help you make such important decisions. This article describes the 6 most popular Momentum Indicators. If ever there was a “cut and save” investment advisory this is it!

3. Time the Market With These Market Strength & Volatility Indicators

There are many indicators available that provide information on stock and index movement to help you time the market and make money. Market strength and volatility are two such categories of indicators and a description of  six of them are described in this “cut and save” article. Read on! Words: 974

4. Market Timing Works Using These Trend Indicators

The trend is your friend and this article reviews the 7 most popular trend indicators to help you make an extensive and in-depth assessment of whether you should be buying or selling.

5. Is “Buy & Hold” the Way to Approach These Markets?

Assume that we are at a point corresponding to the beginning of 2007. How would our investing/trading techniques weather the same conditions represented by this most recent market adjustment? Would we be able to mitigate the losses (or even avoid them)? A traditional buy & hold, diversified investing strategy will be evaluated here.

6. Value Investing: The Practical Application of Benjamin Graham and Warren Buffett’s Principles

While the average amateur investor may be excellent in their own career field, it doesn’t mean they know what to invest in, or how to pick stocks. In fact being very good at your field can give you the false sense that whatever stocks you pick or your broker picks for you must be good, because after all, you picked them and you picked your broker — and you’re smart so, no doubt, those stock prices will go up. Unfortunately, the smart and talented stock-picking neophyte is not investing at all but speculating. Words: 924

7. Attn. Financial Advisors: How Much Asset Class Diversification Is Really Necessary?

[No one would argue that] diversification is not a sound investment practice but exactly how much risk reduction, in actual numbers, is obtained through application of this philosophy? This analysis is an attempt to quantitatively determine its relevance – [and you will be surprised by the answer. Read on!] Words: 1317

8. Follow Bob Farrell’s 10 Rules of Investing – or Suffer the Consequences

Individuals are long-term investors only as long as the markets are rising. Despite endless warnings, repeated suggestions and outright recommendations – getting investors to sell, take profits and manage…[their] portfolio risks is nearly a lost cause as long as the markets are rising. Unfortunately, by the time the fear, desperation or panic stages are reached it is far too late to act and I will only be able to say that I warned you [- unless you take the time to read, and study the contents of this article]. Words: 1945; Charts: 10; Tables: 1

9. THE 10 Most Dangerous Investing Mistakes

Protect your money by steering clear of these 10 most dangerous investing mistakes. Words: 716

10. Apply the Bell Curve to Your Portfolio Asset Diversification – Here’s Why

80% of my investable income is in cash, precious metals and a small number of stocks. That might seem crazy, but the Pareto Principle, Zipf’s Law and the bell curve have convinced me that it’s a waste of time and money to get any more diversified. [Let me explain why that is the case.] Words: 396

11. What You Should Know About the “Dogs of the Dow” Investment Strategy

The “Dogs of the Dow” is a simple and effective strategy that has outperformed the Dow over the last 50 years and generates almost 4% in yield. Here’s how it works. Words: 486

12. Asset Allocation: How Sound is the Foundation of Your Portfolio Pyramid?

Regardless of the size of your financial pyramid, without a core-holding foundation, you are building it on sand. Core holdings are for protection, not for profit. They function as insurance against a catastrophe. [Let me explain.] Words: 754

13. “Unlikely” Doesn’t Mean “Never”: “Rare” Events Happen Surprisingly Frequently in the Markets

By definition, rare events should seldom occur [and] applying that understanding to financial markets assumes that all market events follow a normal distribution or, in layman’s terms, a bell-shaped curve. More  specifically, the statistics say that 99.7% of all daily movements should fall within three standard deviations of the mean, no more. Well, guess  what? New research suggests that they clearly don’t follow such a pattern – that “unlikely” doesn’t mean “never”. [Let me expand on that.] Words: 1079; Charts: 1

14. Portfolio “Diversification” Can Kill Your Portfolio Returns – Here’s Why

Most investors don’t know anything more about diversification than you “shouldn’t put all your eggs in one basket” [but] spending some time trying to understand the ways you might be shooting yourself in the foot could seriously enhance your portfolio returns and stop catastrophic risk. [There are some advantages to diversification if you REALLY know what you are doing but the shortcomings can go a long way towards killing your portfolio returns. In this article we identify what they are and how best to avoid them.] Words: 1055

15. Warren Buffett: Diversification is Nothing More Than Protection Against Ignorance

NOT putting all your eggs in one basket makes intuitive sense to many investors. Indeed, evidence indicates that putting more eggs in your basket may actually crack your portfolio, not protect it. Words: 515

16. Your Portfolio Isn’t Adequately Diversified Without 7-15% in Precious Metals – Here’s Why

The traditional view of portfolio management is that three asset classes, stocks, bonds and cash, are sufficient to achieve diversification. This view is, quite simply, wrong because over the past 10 years  gold, silver and platinum have singularly outperformed virtually all major widely accepted investment indexes. Precious metals should be considered an independent asset class and an allocation to precious metals, as the most uncorrelated asset group, is essential for proper portfolio diversification. [Let me explain.] Words: 2137

17. Recognize These 7 Emotions Before You Buy or Sell an Investment

Since there is such a wide range of emotions, it might be helpful for you to do a ‘gut-check’ before you actually buy or sell any type of security. Knowing how you “feel” about investing might turn out to be just as important as knowing what you “know.” Words: 737

18. You’ll Never have a 10-bagger if you Sell a Stock after a 2-bagger! Here’s when to Ride a Winner – or Sell

One of the hardest things for individual investors to do is to know when to sell a stock. Many times, you might sell simply because a stock has gone up and you’ve made some money. More often than not, though, this is not a great reason to sell [because, as mentioned in the title of this article,] you will never – ever – have a 10-bagger if you sell a stock after a 2-bagger. That being said, what things should one consider before selling? Words: 912

19. 10 Timeless Investment Rules to Survive This Stormy Stock Market

Rules may be meant to be broken, but with investing ignoring the rules can break you – especially now. Investment rules are tailor-made for tough times, allowing you to stick to a plan just when you need it most. Indeed, a rulebook is important in any market climate, but it tends to get tossed when stocks are soaring. That’s why sage investors warn people not to confuse a bull market with brains. Here are 10 rules to survive this stormy stock market. Words: 769

20. Don’t Invest in the Stock Market Without Heeding These “Rules of Trading”

I’m not going to candy coat it for you: making serious money in the stock market is a ton of hard work. It takes patience, savvy, and a certain level of market smarts – and the cold, hard truth is that if you don’t have them, the big boys will drain your portfolio dry. Unfortunately, those are the three areas that most retail investors need to work on the most. Otherwise, they will simply end up in a cat-and-mouse game where they are the mice. Don’t fool yourself for one second into believing that your “due diligence” can be done by watching a show or two on CNBC. It just doesn’t work that way but if there is one voice from the markets that should grab your attention every time you hear it, it belongs to Dennis Gartman, founder and author of The Gartman Letter. He’s sort of a guru’s guru. [Here is] a glimpse into how he views and trades the markets. Words: 106

21. Investor Fear Gauge: What Everyone Should Know About VIX

VIX is the ticker symbol for the volatility index that the Chicago Board Options Exchange created to calculate the implied volatility of options on the S&P 500 index for the next 30 calendar days. The formal name of the VIX is the CBOE Volatility Index [and informally as the investor fear guage]. Below is some introductory material on the VIX offered up in a question and answer format: Words: 915

22. Conventional Stock Market Investing Advice Is Rooted in Myth! Here Are the Facts

The conventional stock market investing advice is rooted in myth – rooted in a false understanding of what the historical stock-return data says about investing for the long-term….Set forth below are five reasons why I believe that the conventional stock market investing advice must soon change. Words: 2067

23. Be Careful! Former Investment “Rules” Nolonger Work – Here’s Why

Investment “rules” that were relevant for a century are obsolete. They were based on a world where economies grew, people’s standard of living increased and outcomes tomorrow better than today. Arguably each of these conditions will not hold in the future but if they don’t, neither do the rules of thumb that guided investing last century.  These guiding principles developed and worked in a world that that no longer exists but applying them in the future will result in devastating financial outcomes. [Let me explain.] Words: 1261

24. 12 Books that EVERY Financial Advisor – and Investor – Should Read

Bill Ackman, founder of Pershing Square Capital Management, believes the following books are essential financial reading. Enjoy the summer! Words: 235

25. Portfolio Down? Apply These Wise Sayings to Successfully Rebuild It

When the stock market reaches extreme levels of distress, the average investor – particularly those who have done their own research and made their own investment decisions – panic at seeing their savings diminish to such an extent. They often start questioning whether they should be making their own decisions and often their reaction is to salvage what is left and sell, sell, and sell some more. [Regretfully, that is not what one should do. Let me explain why that is the case and what you should be doing – NOW.] Words: 380

26. Words of Wisdom From the Most Brilliant Investors Ever

There’s a bewildering amount of advice on how to invest…so it’s worthwhile, especially in today’s volatile markets, to take a look at what has actually worked, as opposed to what people claim works. We’ve collected some of the finest wisdom on markets from the most respected and successful investors, past and present. Words: 865

27. Understanding Systematic Risk, Modern Portfolio Theory and the Efficient Frontier

Risk inherent to the entire market or market segment is referred to as systematic risk and modern portfolio theory says that a blend of investments has the potential to increase overall return for a given level of risk, and/or decrease risk for a given return that the investor is trying to achieve. The expected risk/return relationship is known as the efficient frontier. [If you have a portfolio of investments then you need to fully understand what all this really means and how you can apply it to your portfolio makeup to enhance returns under any circumstances. Let me do just that.] Words: 1325

28. Should Stocks Be the Cornerstone of Your Portfolio?

There is a common notion that stocks, at least if held for a long-time, outperform other assets [and, as such,] should be the cornerstone of any long-term portfolio. [While that is indeed true,] it is best to focus first on how much you are able and willing to lose (i.e. what risk you are able and willing to bear) when determining the optimal allocation for your portfolio. [Only] then [should you] think about what potential investment returns you might be able to capture. [Let me explain.] Words: 1503

29. Motivated Stock Pickers CAN Beat the Market! Here’s How

What hope can there be for motivated stock pickers – no matter how much they sweat and toil – to outperform the low-cost index funds that simply mechanically track the market? Well – in spite of the absurd rise of the Nobel-acclaimed, and highly promoted, Efficient Market Hypothesis that claims that individual investors can’t beat the market – it turns out there is plenty! Just ask Warren Buffett, for one. [Let me explain.] Words: 1574

30. Don’t Be Misled – There are Major Differences Between the HUI, XAU & GDX

The number, market cap and currencies of the constituents of the HUI, XAU, GDX, XGD and CDNX indices differ considerably from each other and, as such, each index presents a different picture of what is really happening in the precious metals marketplace. This article analyzes the make-up of each index to reveal the biases of each to arrive at the answer to the question in the title. Words: 1026

31. Don’t Invest in the Stock Market Without Reading This Article First

History has shown that investors who stick to disciplined, fundamental-focused strategies give themselves a good chance of beating the market over the long haul and James O’Shaughnessy has compiled data that stretches back to before the Great Depression, back-tested numerous strategies, and has come to some very intriguing conclusions. [Let me share some of them with you.] Words: 1325

32. Size Does Matter: A Look at Market Capitalization and What It Means for Investors

People choose certain stocks for many different reasons: business location; sector strength; product innovation, but some investors choose what to buy based on company size, or market capitalization [believing that size does matter. Yes,] understanding the difference between small-cap, medium-cap and large-cap companies is the first step to making the right choice. [Let me explain.] Words: 600