Do you use a specific method?
hi shamsaee,
yes...it is easy. i can explain it in a second.
here are my keys.
i read lots of business news every day, particularly "ceo" interviews. i never skip over ceo interviews on any company. reading or listening to them talk about their own and other companies develops strings of connectivity in your thinking. if i am listening to someone like craig barrett(intc) or john chambers(csco) or scott mcnealy(sunw), i take notes to read over later.
i listen to lots of conference calls.
i attend some annual general meetings.
i go to conferences where companies i like are demonstrating their products. there, i attend the seminars and talk to the engineers teaching them and listen to the customers...particularly for any concerns they may have.
if possible, i buy a sample of the product i am interested in investing in...i let my kids try it out.
it amazes me that folks will invest huge sums in gmst but won't pay a few bucks for a tv to check it out first. i wondered how many guys who questioned yuen's purchase of the e-books patents had ever seen or used an e-book.
i narrow my search by concentrating within sectors that are in tornadoes or looking for individual products that may have huge worldwide markets.
i love megamonopolies...my own word, which i define as companies with significant patent protection... in multiple, large markets.
patents can be much more important than cost as a barrier to entry.
cree and gmst are my favorite current examples of this.
when i find a tornado, i get in pretty quick. B to B is obviously in a monster tornado and there are a lot of plays available at this time. it is hard to make a mistake in a large tornado.
arba, cmrc, vert and fmkt constitute my basket here. although i must admit, i have not finished my dd on them. have not read sec stuff. presently, they are growing at an annual rate of 3x to 17x.
i don't see a gorilla here...but that is one helluva growth rate.
my experience has been that stocks not across the chasm will shoot up on big news...then drift down as folks realize there ain't no revenues yet. there are usually several waves of this...as time progresses, if the product is obviously accumulating the interest of several major players...some news event will trigger a big run. then it drifts down again.
sustained upward moves come from one thing and one thing only...increasing revenues and at least the promise of profitability.
i do not like to buy em running...but i occasionally do. in this case i will take some profit early and/or scalp to lower my cost basis. i prefer to let them finish the run and correct back, then average in. this is especially important if the revenue ramp has not yet begun.
ok, so how do i get in early? which is what you really want to know.
i establish a long position in shiny pebbles when it is patently obvious that the world wants the product...the testing is complete...massive design wins are in place...and mass production is underway or about to begin. i like to be there just before the quarterlies start showing accelerating growth not after. i am slightly contrarian to this thread in that respect.
patience pays. i have never bought a stock that did not eventually get below my buy price and i have never sold at a high. but there is a lot of room between those two points to make a profit.
when to sell?
i sell tech stocks when valuations become absurdly high or a company is in any difficulty. and i do not delay about it.
if i am confident in my dd, i don't mind averaging down. but, i never buy at highs...i do most of my investing on dips close to averages and big market down days.
i invest in a much larger world than tech stocks...tech stocks are the most time consuming and difficult. i.e., nipsco was available a few months ago on a dip to 13...with a yield of 9%, i was quite interested. this looked like a great IRA stock to me. a well run, growing company with yield and high appreciation potential on a big dip for a lousy reason...now trading near 20 and you still get the 9% on the original investment amount.
here are some promising shiny pebbles i am following closely right now and why...i either have or have had positions in all. and will have them all again if they continue on present course.
imcl...2 on-going phase III tests and several more in phase II. these drugs address enormous markets...but not approved yet.
mvis...awesome products...GE pension fund just invested in this company. ceo recently said they will sell tens of millions beginning next year. i believe him.
wind...approx 2 thousand design wins this year. as those products enter the market, wind revenues will ramp. on a dip now because wind has been acquiring and consolidating itself into the major player.
gstrf...i read several studies about 2 years ago and believe the demand exists...this one is the riskiest imo, but it has the highest potential, short term, reward profile imo. i also like the recent analytical statements that gilder and jacobs(qcom) have made about gstrf...but it is still risky.
cert...wireless cryptography, design wins rolling in...revenues ramping...but still very small.
elon...discussed earlier today.
i am in a private group of some of the most tireless stock researchers around...we work together. we e-mail each other daily...we use 2 and 3 man teams to check out companies. we pick over each others dd. we have members in san jose, palo alto, seattle, portland, raleigh/durham, greensboro, florida, atlanta, europe, new york city, connecticut, texas and washington dc. we have an architect, engineers of various persuasions, a surgeon, a coupla film industry guys, a fund executive, a former merrill lynch executive, and a coupla old farts...only a few of us have ever met. maybe you should organize such a group.
i would refer you back to post # 27607 by stockhawk. i have it printed and on my desk in my daily read file...i have been reading the 4 step formula everyday.
just so frank and mike won't kick me off the thread...let me say...i really like ntap and emc too.
unclewest
gone fishing |
