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A recent advertisement proclaimed the best returns were made owning stocks
(buy and hold, fully invested) in the best perfornming industry group...and
suggested searching for the following characteristics as a method for doing
so:
1. Rapidly growing Sales, and Earnings - Potential to double or triple in
one year. (How measured?)
2. Institutional Support (unknown amount)
3. In one of 197 "Sectors" * in which 90% of stocks are going up (?)
Recommends Technology, Health care, and leisure...over next few years).
4. At or near 52 W High (-10% perhaps)
5. High Relative Strength > 90% in "Industry Group"
This sounded like it could become a coherent method for long term investing,
if the correct scans and searches can be performed.
The ad claims being in the top industry group for 33 years beat timing the
averages 58% to 14%, compounded APR.
Three points seem clear: 90% Group RS, near 52 W High, and some minimum %
institutional, Fund ownership.
Almost as clear is the cutoff for rapidly growing sales and
earnings...although I do not sense exactly where the proper rate must be for
a 2 or 3 times price increase in one year.
And thirdly, how best to find such candidates in an industry group in which
90% of the stocks in the group are moving up? (period of time, to what
extent?)
Does anyone believe this is a fruitful field of study, and if so, has it
been written down already?
Any comments would indeed be appreciated.
Michael Robb
* I think he confuses Sector with Industry Group, as I have not seen where
there are 197 Sectors.
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