Timing is everything they say. When it comes to picking winning stocks – that certainly rings true.
As a diligent, prudent investor you need to find the right company that is growing fundamentally – and then you need to look for triggers that will help show you when the best time to invest is.
From my experience, you look for emerging companies that have some big news or catalyst that will help bring increased exposure to the company and potentially propel the volume of a stock – presenting a profit opportunity.
Because when these companies move – they move fast. It can be volatile, but volatility is your friend (when it’s on your side). Knowing when to get in is crucial… a smaller capitalization stock could jump 50% or more in a single day with the right ingredients.
To be a successful stock investor, you need to stay alert. This by no means is a slow paced environment and is generally reserved for investors who aren’t scared by making “moment’s notice” trades.
Over time, I’ve developed a 4-point formula that pinpoints positive attributes that most successful stocks have in common.
You’ve got to know exactly where to look. Knowing the “where” and “what” to look for and the profit potential of stocks are literally endless.
#4 Marketing: Marketing is a great indicator on a couple levels. Are they spending money on their product or service – and also are they spending money to help build their shareholder base.
Not every company is featured on Jim Kramer or in the Wall Street Journal. As a company they need to get word out to the public that they exist. Do they have an awesome new product or great news on a new venture – they need to get the word out.
So look for any marketing that they’re doing. Heard anything on the radio, seen an ad on TV, or read some article on a website. The more the company is spending on marketing the better chance they have for growth.
We’re talking about shareholder and consumer growth. If they’re spending money that means they believe in their long term vision as a company and are willing to spend to get there.
#3 Structure: This is VERY important because it directly affects what any buying or selling pressure will do to the stock. Share structure is how the company is organized internally.
For instance, how many shares have they issued in total? How much of that is in the ‘float’, how much is restricted? What percentage is being held by company executives?
It’s a great way to see if the company is confident – see how many shares the management and inside investor have in the company. What have the major shareholders in the company been doing? Adding stock – selling?
We want to see a strong position held by insiders and management, and see that position being added to. Nothing tells an investor what an insider thinks about the long-term upside of a company like their holdings and transactions.
#2 Insiders: Does Warren Buffet own a position – what about other major hedge funds – what’s their position in the stock. We want to see some major players building and holding positions in the company.
A good way to find this information is to follow major hedge funds. See what they’re holding and see what new companies they’re investing in. These professionals tend to see an emerging opportunity at the ground floor. So if their investing in a new start up – follow their lead.
#1 Timing: Timing is the most important aspect in finding profits. It’s a fluid issue that is often the hardest part for any investor – do I pull the trigger and buy – or wait for more information.
I look for momentum in the company… strong earnings, new partnerships, or great revenue. And see what other people are saying – what the major players are doing with their shares.
Basically every stock tends to have some catalyst for a breakout. By understanding a company’s internal thinking and strategies then you can see how confident the insiders and other institutional players are… from there see what kind of press the company is getting and look at their technical trading.
If you look at a company and see all 4 attributes then you’re on to something. You’ll potentially find a company with long-term growth prospects – and we know this because they’re spending money and insiders and big instructional investors are building their positions. All it takes is a positive news story and volume could spike. So be prepared to make a trade.
The hardest part of timing is the confidence to pull the trigger on a trade. But timing is everything and it’s better to get in early before the masses.
Regards,
Ethan Warrick
Editor
Wealth Authority
