We started last week the first of our weekly Investing Opportunities series in which we plan to publish 16 exclusive articles. We are ‘hunting’ for those few mega opportunities that come up each year. We are looking for profits of 100 to 200% … in a fully legitimate way, no pump-and-dump or other scams, in sectors or stocks that have disruptive growth potential. As said in our piece How To Turn 10k Into 1 Million In 7 Years: Get-Rich-NOT-So-Quick there are 3 mega opportunities per year. Hitting them is what we are committed to do, with our INVESTING MOMENTUM method, and we said so in the public domain in Forecasting The 3 Top Opportunities Per Year Becomes InvestingHaven’s Mission. Last week we wrote about what we believe is in store as investing opportunities in the 2nd half of 2019, and we revealed some chart secrets combined with deep market insights on broad markets and concluded with the specific sectors we are watching. This week we pick out one hidden gem in one of the sectors we identified last week: cloud tech sector. It is a very small cap stock which typically come with huge risk, not so for this stock, this is why!
Every good analysis takes a top-down approach.
This means two things: from the highest level of the market (asset class) to the specific financial security to invest in, but also from higher chart timeframes to the lower daily timeframe.
First, when it comes to asset classes, this is what we said last week: we expect stocks as an asset class to do well in the next 12 months.
On a macro level we see that stock markets are about to start a new bull market. The chart below is the one and only chart we monitor, combined with 20-year Treasury Yields, to know if we are in a risk on or risk off cycle. We don’t look at the S&P 500, Dow Jones Industrials, etc. Again, ‘less is more’, which also applies to the volume of data points in your research.
We also said to strongly believe the correction in stocks is over, the one that created panic last year in November and December.
Why do we believe so? Because of the 40% rule in Treasuries, a rule nobody else has shared in public domain ever before.
So those are favorable conditions to look for stocks that have a high beta. In that respect we have one important tip to take into account, to avoid a very common and very expensive mistake that lots of investors make. As said in our 100 investing tips:
‘High beta stocks need favorable broad market conditions to do their magic‘, and it may take time until those conditions develop. That’s why it is worth accumulating high beta stocks during consolidations and bear markets, and accept virtual losses for an extended time, provided it is the right sector. Certainly avoid sectors that just came out of a bull market, and did not go through an extended bear market.
In essence what we are looking for is hidden gems in the small to mid cap range of the stock market with lots of upside potential, just because broad markets are favorable in the next 12 months.
That’s we try to accomplish with our INVESTING MOMENTUM method.
Most investors tend to just crawl the internet, look for articles in financial media and on twitter (‘the holy grail tweet that will make me rich’), etc. We continuously do find ‘opportunities’, but are they really reliable + profitable?
No, is the answer, because it is maximum 3 per year that do really, really well. This excludes some really specific stock opportunities though, it includes market or sector specific opportunities.
Remember, less is more, and it applies more so to profitable investing in financial markets.
In looking for the ideal small cap or even micro cap stock we know that investors tend to fall in some common traps which remain largely invisible. Whether it is the structure of stock options, shareholder dilution, hidden costs or limited revenue … it only becomes visible after deep-diving into the company’s specifics.
This, obviously, is information you don’t find. Which is why looking for info on the (public) internet is not the way to go, or at least comes with considerable risk.
We have identified a hidden gem with our INVESTING MOMENTUM method.
Because of the high value of this we reserve this for subscribers to our ‘free newsletter’. This is premium content that we give away for free, but only after signing up to our free newsletter. We are planning to send out this newsletter at 9 am EST on Friday July 26th 2019.