Underlying guiding thoughts on buying stocks that can double.
- The majority of stocks have a 100% swing range from Low price to High price or from High price to Low price within a twelve month period. Therefore, it is not so much what stock to buy for a double, but rather when to buy that stock. This enforces the buy low, sell high principal. Check out the last 52 week high to low or low to high range on a sampling of stocks.
- One approach this is to look for the most out of favor industry in the public market space. Target the best two companies in the industry and perhaps one more speculative company. This is the George Soros method of buying low & sell higher. If the speculative company fails, the two industry leaders should cover the loss. If the speculative stock works out, then you really will have done well when the industry recovers.
- Volatility or rapid sector rotation is a plus in this investment system.
- Know have to your company well enough that you have little fear of buying shares when the price has fallen, and the news is bad. If you have concerns about the company don’t buy or get a knowledgeable third party opinion of the company. It is good if the third party in this situation has an accounting background in the particular industry the company is in.
- Let the shares base in price using Stage analysis. Buy slowly based on fundamental value with multiple purchases and then become more aggressive a buyer as the stock price begins to rise above the Stage one stock pattern into Stage two stock pattern.
This process incorporates Behavioral Finance, Fundamental Analysis and Technical Analysis in general terms.
You are buying fear (buying bad news or more likely, apathy ) from a behavioral perspective, buying value from a fundamental perspective and working on timing from a technical perspective.
You will, in all likelihood, be buying too early and selling too early. In this approach, we view long-term capital gain holding periods as desirable.
Think of the stock market as your business and individual companies (or ETFs) as your inventory. What is the desirable inventory holding period that best fits your situation.
In this version of investing “timing” will take care of itself.
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LOTM Style – We are more a controlled speculator, than diversified investor or short-term trader. We allow 100% loss/risk on some purchases. Often, we dollar-cost-average into losing positions. Volatility is our friend, not something to be feared. We let our winners win, as much as possible. We do not like paying taxes. We love value, yet watch charts. Our goal is to find value stocks that might double in one to three-years.
See our website for our doubling to a Million$ game. We were playing this game of doubles before Patrick Ben-David talked about it. Ideas in this blog are highly volatile and only for use by those who are comfortable with high-risk, high-reward investments.
Written April 24, 2023, by Tom Linzmeier, for Tom’s LOTM Blog at https://lotm.substack.com/.
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