by Dr. Scott Brown, Education Director
Friday, March 27, 2009: Issue #965
Things are off to a fast pace today at the Investment U Conference, our schedule is packed. And it doesn’t look like it’s going to let up anytime soon…
Day Two opened up with a number of speakers who went in-depth on a variety of the hottest topics out there right now: small caps, foreign currencies, gold and investing during a recession.
Profitable Trading Strategies To Use Right Now
Nobody knows what the market is going to do next month, next week, or next year. But we can look for similarities in the best performing stocks. The Oxford Club’s Momentum Alert service run by Alex Green does exactly that.
It’s a systematic survey of stocks over the last 40 years of stocks that made huge positive moves during this period and the traits they have in common.
Here are the 10 things you want to look for when picking winning stocks:
- Double Digit Sales Growth – you need sales growth of 10% or better.
- Earning Momentum – 25% earnings growth, that has been increasing for the past 3 years.
- Rapidly increasing earnings momentum that is accelerating.
- A Return on Equity of 17% or better.
- New Innovative Products.
- Young Entrepreneurial Companies – 8 years out from their IPO, before they get too big.
- High Quality Management.
- A High Level of Institutional Support and Sponsorship.
- Share Buybacks.
- Insider buying.
But it isn’t always enough to make good purchases of your investments. You need a method that can help you protect your profits and your principle. It’s why we use trailing stops.
It’s a strategy that makes sure a small loss never turns into an unacceptable loss. And by using a systematic selling strategy, you can focus on picking winning and undervalued stocks.
Unfortunately, for much of the time, it’s difficult, if not impossible, to decode whether a company is undervalued or not simply by looking at their financials.
It’s why the Insider Alert service follows the movements of the insiders – its one of the surest ways to know if a company is undervalued.
Insiders know things such as if the company has gained or lost a key account, or a key employee who is a rainmaker. In short, they know the company better than anyone else. And taking a cue from their trades gives us one of the best indicators of their assessment of its value.
It’s why Alex is really excited about 99 Cents Only Stores (NYSE: NDN). Insiders own a power punching 43% of all stock, and are buying more.
Alex has another company that’s he’s excited about as well. This technology company has been quietly helping businesses with their technology needs. Over 29,000 businesses use their products and services now. And insiders are buying heavy.
You’ll get the full recommendations in the audio transcripts of our conference, here.
How Your Portfolio Can Endure and Prosper in the Current Global Crisis
Keith Fitzgerald, Investment Director for Money Map Press, emphasizes that history is littered with failed institutions. In fact, fifty-three companies have failed this year in the United States alone. We’re seeing that “too big to fail” is a myth.
But, as Keith continued… economies survive. It creates tremendous opportunity for investors seeking to diversify globally. It’s also why he’s incredibly bullish about China, and a few companies from there in particular.
Like Huaneng Power International, Inc. (NYSE: HNP), which powers the entire eastern seaboard and another Coal mining company that could do even better.
But he cautioned, that doesn’t mean that all countries are worth investing in.
It was a sentiment that Sovereign Society Editor, Jack Crooks, agreed with. He discussed some of the most important issues facing China right now, and the emergence of a new “bloc” of countries we could be hearing more about.
While we’re familiar with BRIC nations, Brazil, Russia, India, and China, many haven’t heard of another group, the PIGS. And this group could threaten to pull down one of the European Unions stronger members…
We heard from Chuck Butler, President of Everbank World Markets, on why now more than ever individuals need to diversify their investment portfolios and one of the best foreign currencies he recommends investors should be in right now.
In addition, he’s looking at China’s commodity markets as a canary of sorts. If it implodes, the commodity market around the world could collapse. It’s a forecast we’ve heard from quite a few speakers.
We learned about safely – and legally – setting up foreign trading accounts in offshore banks. Because of the hassles created by the SEC, many foreign banks are eliminating U.S. customer accounts.
Finding Thriving Small Cap Stocks
Looking for an innovative company, or one with a significant first mover advantage?
Don’t rely on Wall Street… most of these companies don’t get coverage from them. There are four factors Louis Basenese looks for:
- Innovation. Is there something that really has the potential to be big? The innovation has to be a $1 Billion market opportunity.
- Magnet for Private Capital (Venture Capital or Private Equity). Most companies start out with seed capital so look for really good innovations that have been well funded.
- Get in early on within 5 years of the IPO.
- Make sure the company has a major index listing.
Lou likes to think of his trading philosophy like this, “We’re swinging for the fences but only with small calculated risks.”
So he keeps his allocation and position size small:
- 10% to 20% of total portfolio max into these hot stocks.
- No more than 1% in any single stock.
One of the companies that Lou’s interested in right now is ICU Medical Inc. (Nasdaq: ICUI). This company started when a physician had a patient die from an accidental disconnection of an Intra Venous IV line. He created a click-lock which saves millions from that same preventable death.
Now the company is working on a new product that could dramatically expand the market for their whole portfolio of medical devices.
And that’s not the only stock he recommended. He added four more small cap stocks that fit his criteria perfectly. But just because you aren’t here doesn’t mean you don’t have to left out for long. Our full conference audio files will be available for any of our readers to download in MP3 format soon. You can find more information here.
How To Create Your $1,000,000 Portfolio From Scratch
One of the things I’ve been most excited about is the release of my new course for Investment U. In one of my talks today, I explained the reasoning and methodology behind its strategies and goals.
Our new course is a one-of-a-kind educational experience. It teaches you the details of stock investing you would only receive if you had finished an MBA in finance at a top university – except better. We’ve cut out the fluff and distilled the proven fundamentals of investing into an easy to read and interesting format.
We’ve been working on this for a number of years and we’re excited to have it so close to release. I’ve got to go now, but we’ll catch up tomorrow. It promises to be even busier than today.
It all starts with education,
Dr. Scott Brown
If you’d like to receive an audio version of the entire Investment U conference and get the complete list of stocks Alex Green and Lou Basenese talked about, go here.
- The Investment U Roving Reporter: Day 3 – Live at the Conference
- Insider Selling: How to Profit From The Insiders’ Unfair Advantage
- The Investment U Roving Reporter: Live at the Conference
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