My new book – Investing in the Age of Digitalization – is available on Amazon.com. My book contains most of the metrics, charts and research sources I use to discover tomorrow’s top performing stocks . . . today! Included in the book are detailed instructions on how to discover new and add-on “big bets” being made by institutional investors such as Fidelity, T Rowe Price, Morgan Stanley and State Street. I also have an entire chapter entitled Knowing When to Sell. In short, my book is sort of a How To for any investors interested in discovering stocks that are either contributing to or benefiting from the Digital Transformation.
Here’s what The Wall Street Journal had to say about the Digital Transformation in a May 9, 2017 opinion article entitled Prepare for a new Supercycle of Innovation:
“The American economy is poised to embark on an innovation boom of historic proportions that will undermine incumbent players, transform everyday life, and make some alert investors very rich.”
Has that train already left the station? Not according to Forbes Magazine. In their October10, 2022 issue – Top 10 Digital Transformation Trends for 2023 – the first and last sentences in this article:
“Digital Transformation is never going to be done.
“2023 is setting up to be another fascinating year in technology and while markets continue to make us all a bit uneasy, it’s all but certain technology is ourt best path forward as we seek to return to the next period of economic growth.”
In the Fall of 2017, I had the opportunity to teach a continuing education class at a local university. My subject was, Unusual Percentage Increases in Price and Volume – Predicting Specific Stock Market Gainers. Following that class, some of the folks who took that course requested that I arrange for regularly scheduled group meetings to continue discussions related to the discovery of stocks that offered the potential for above-average stock market performance.
Our original meetings were relatively unstructured, and discussions were typically intuitive, lacking useful metrics or screens that could be used repeatably to discover tomorrow’s winning stocks . . . today. By July 2018, most of us had read The Second Machine Age and our continuing efforts had enabled us to discover valuable sources of research related to the Digital Transformation. Therefore, with this increased level of knowledge and confidence we decided to launch a model portfolio, designed to test our ability to discover stocks with extraordinary growth potential. Obviously, mistakes were made over the ensuing weeks and months but, overall, the performance since launch has conformed to the name we gave this portfolio – Extraordinary Growth Stocks.
One might even consider that the performance of our portfolio was indeed extraordinary. The following represents performance from the launch date of the model portfolio, July 1, 2018 until December 31, 2021:
S&P 500 + 76.2%
Nasdaq Composite + 109.9%
EGS Portfolio + 225.3%
Percentages don’t always resonate with many investors, so let’s convert those percentages into dollars. If the original $500,000 had been invested into each of the market indexes and the EGS portfolio, the following shows the dollar values for the same period:
S&P 500 $881,000
Nasdaq Composite $1,049,500
EGS Portfolio $1,629,516
When looking at the performance numbers in the above, keep in mind that almost all institutional investment managers – including mutual funds and hedge funds – strive to match or beat the S&P 500 – and many fail to do so. Also, keep in mind that the Nasdaq Composite is heavily weighted towards technology stocks.
And then came the 2021-22 correction
As all investors know, market values rarely advance upward and to the right interminably. A steady stream of good news had generated euphoric expectations (greed) and market values become irrationally inflated. Stock market professionals carefully monitor these trends. They know that when the flow of good news abates – or when elements of negative news begin to appear – those irrationally inflated market values represent an alluring opportunity to profit by selling stocks short.
As you probably know, selling stocks short reverses the normal investment procedure of first buying a specific stock low and then selling high. In contrast, short sellers first sell a specific stock that they don’t own at higher prices (they borrow stocks that they sell short from their brokerage firm), hoping that they can later buy those shares at lower prices and the brokerage firm can return the stocks to the original owners.
In late 2021 and early 2022, several negative macro-economic events began to dominate the financial news. Fears of inflation, rising interest rates, the Russian invasion of Ukraine, and supply-chain disruptions all contributed to significant declines in the S&P500 index and the Nasdaq Composite. The latter, of course, is where most of the stocks involved with the Digital Transformation are listed.
I can’t predict that our investments will return to the end-of-year values indicated above, but our group has opted to remain invested in most of those stocks. You follow the performance of our investments at the bottom of this page.
I want to emphasize that you don’t have to be a college graduate with a degree in finance or economics – nor do you have to be an expert in the arcane domain of stock chart analysis – to learn and to profit from the three stock discovery triggers presented in my book. They are the same discovery triggers that our Members use to discover stocks for our EGS Portfolio.
In fact, I often share with my subscribers that the discovery triggers are sort of like an Easter Egg Hunt in that the discovery process is a lot of fun. Almost all participants in an Easter Egg Hund do find eggs. Likewise, almost all participants following our investment methods will discover stocks with extraordinary growth potential.
Most importantly, in most instances, as a Member you will be discovering stocks before most other individual investors – and in some instances before institutional investors.
Whether you read my book or opt to become a Member, not only will you have fun in your quest for discovering tomorrow’s winning stocks – today – the process will also be a wonderful learning experience for you.
The following represents performance as of the end of October 2022:
S&P 500 + 32.6%
Nasdaq Composite + 41.9%
EGS Portfolio + 56.4%
Percentages don’t always resonate with many investors, so let’s convert those percentages into dollars. If the original $500,000 had been invested into each of the market indexes and the EGS portfolio, the following shows the dollar values for the same period:
S&P 500 $663,000
Nasdaq Composite $709,500
EGS Portfolio $782,154