Richard Love – Superformance Stocks An Investment Strategy for the Individual Investor Based on the 4-Year Political Cyc
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Richard Love – Superformance Stocks: An Individual Investor’s Investment Strategy Based on the 4-Year Political Cycle (Total size: 24.9 MB Contains: 4 files)
As an investing strategy, the author advises exploiting the four-year political cycle. Following that, he writes about the time’s superperformance equities and the common denominators of such stocks. What characteristics do they share, and how can you find them? A superperformance stock is defined as follows: “One that more than quadrupled in price and grew at least three times in a two-year timeframe. If the price did not reach a new high in less than six months, or if there was a price response of 25% or more, the move was judged over.
“Stocks with the potential to become superperformance stocks have some of the following characteristics:
Earnings gains that are considerable, especially if the increase is unexpected.
Acquisitions and mergers.
New leadership.
New merchandise.
The primary cause for a stock’s significant gain is an increase in earnings and sales. Other factors come into play as well, including as mergers and acquisitions, new management, and new products, all of which serve to increase a company’s earning capacity. Even while the rise in earnings is not yet obvious, the market discounts the future, which may be enough to drive the price much higher.
However, if those expectations are not met in the future, the stock price may fall precipitously, as the move would inflate the value.
The best gains are obtained when the market has had a significant correction or a bear market, because there are many bargain possibilities in such scenario. The fiscal and monetary conditions influence the environment, since lower interest rates and fiscal stimulus contribute to greater stock values. And it is in this atmosphere that superperformance stocks abound and have the biggest upside potential. Rising interest rates and fiscal tightening are generally unfavorable for equities, and it is far more difficult to discover a company with the potential for a substantial price gain in such an environment.
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