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Superperformance stocks: An investment strategy for the individual investor based on the 4-year political cycle
The Author suggests using the 4-year political cycle as an investment strategy. And subsequently, he writes about the superperformance stocks of the time, and the common denominators of those stocks.What traits do they have in common, how to find them Definition of a superperformance "One that at least tripled in price and increased at a minimum rate of three times during a two-year period. A move was considered ended if the price failed to reach a new high in less than six months, or if there was a price reaction of 25 percent or more."Stocks that have a chance to become superperformance stocks share some of these increases of earnings, especially if the large increase comes as a surprise.Mergers and acquisitions.New management.New products.Large increases of earnings and sales are the main reason for a stock to rise substantially. Other reasons come into play as well, as mergers and acquisitions, new management and new products are all in service of providing higher earning power for a company. The market discounts the future, and that might be enough to push the price higher significantly, even though the increase in earnings is not still visible. However, if those expectations are not realized in the future, the price of the stock may drop severely, as the move would inflate the valuation.The best results come after the market has experienced a severe correction or a bear market, because that is the time when there would be many bargain opportunities in that environment. The environment is dependent on the fiscal and monetary situation, as the lowering of interest rates and fiscal stimulation lead to higher stock prices. And that is the environment where superperformance stocks are abundant and have the most potential. Rising interest rates and fiscal tightening are negative for stocks in general, and in that kind of environment it is much harder to find a stock with potential to have a large increase in price
- GenresFinance
260 pages, Hardcover
First published January 1, 1977
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October 5, 2021mark minervini
February 17, 2022
Some things never change:
From a political point of view a better time to begin slowing the economy is at the end of the first year following a presidential election. This timing would permit about a year to fight inflation with slowdown measures and another year of recovery leading to a highly prosperous period during the next presidential election year, which would be near the top of the cycle.
Stock purchases should be made when the risk of loss appears to be minimal and the potential for large gain appears to be very good. In the past the best opportunities for large gains with slight risk have been near the bottoms of the bear markets which have occurred regularly about every four years. The safest time to invest is when the market appears weakest after a long decline. When the national economy is booming and inflation is beginning to be of concern, stock prices often begin to decline because some investors anticipate federal anti-inflation policies such as tight credit. At bear market bottoms, however, this does not appear to be true. Stock prices usually continue to decline in bear markets even after the Fed has switched from a policy of monetary restraint to one of monetary ease.
For a general approach to successful investing, plan to purchase stocks when the market is forming a base following a bear market, and plan to sell stock when bull markets are beginning to grow old. Many investors evidently have difficulty taking these actions, particularly when it comes to selling stocks. There is vast professional assistance available in selecting stocks for purchase, but in determining when to sell a stock, the individual investor is usually on his own.
If you are interested in purchasing some stock, and the stock averages are in a bear market, wait until there is evidence which indicates that the end of the downward movement has arrived. The evidence could include very sharp price declines with a big increase in volume, the number of stocks declining vastly exceeding those advancing. If you follow stock prices closely, you will recognize the selling climax when panic selling reaches a peak. Most newspapers will feature the event in banner headlines and stock market analysts will be quoted as saying that the Dow Jones industrials will fall another 150 points. There will be long lists of new lows but few, if any, new highs. If you miss buying during the selling climax, wait a few weeks and you might have a second chance-the market often tests the earlier low, following a technical rally. There will be other evidence that the bear market low is at hand or near. The Federal Reserve Board is likely to begin increasing the nation's money supply. Stock market margin requirements are often reduced. Policies of the Federal Reserve can stimulate the stock market; they can also depress i if the board believes that action is desirable.
From a political point of view a better time to begin slowing the economy is at the end of the first year following a presidential election. This timing would permit about a year to fight inflation with slowdown measures and another year of recovery leading to a highly prosperous period during the next presidential election year, which would be near the top of the cycle.
Stock purchases should be made when the risk of loss appears to be minimal and the potential for large gain appears to be very good. In the past the best opportunities for large gains with slight risk have been near the bottoms of the bear markets which have occurred regularly about every four years. The safest time to invest is when the market appears weakest after a long decline. When the national economy is booming and inflation is beginning to be of concern, stock prices often begin to decline because some investors anticipate federal anti-inflation policies such as tight credit. At bear market bottoms, however, this does not appear to be true. Stock prices usually continue to decline in bear markets even after the Fed has switched from a policy of monetary restraint to one of monetary ease.
For a general approach to successful investing, plan to purchase stocks when the market is forming a base following a bear market, and plan to sell stock when bull markets are beginning to grow old. Many investors evidently have difficulty taking these actions, particularly when it comes to selling stocks. There is vast professional assistance available in selecting stocks for purchase, but in determining when to sell a stock, the individual investor is usually on his own.
If you are interested in purchasing some stock, and the stock averages are in a bear market, wait until there is evidence which indicates that the end of the downward movement has arrived. The evidence could include very sharp price declines with a big increase in volume, the number of stocks declining vastly exceeding those advancing. If you follow stock prices closely, you will recognize the selling climax when panic selling reaches a peak. Most newspapers will feature the event in banner headlines and stock market analysts will be quoted as saying that the Dow Jones industrials will fall another 150 points. There will be long lists of new lows but few, if any, new highs. If you miss buying during the selling climax, wait a few weeks and you might have a second chance-the market often tests the earlier low, following a technical rally. There will be other evidence that the bear market low is at hand or near. The Federal Reserve Board is likely to begin increasing the nation's money supply. Stock market margin requirements are often reduced. Policies of the Federal Reserve can stimulate the stock market; they can also depress i if the board believes that action is desirable.
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