A new investment concept came to mind to this old city boy. Growing up in NYC we did not surf or ride the waves. But in the many years I have been trading, this analogy makes a lot of sense to me. I use my magnet Stock Selection Process to identify the best opportunities in market. Too often I find one “technically oversold” and ride a wave with it, only to sell and watch it climb for years. As I continue to learn patience, sharing my best ideas might just help me learn surf instead.
Riding the waves near shore is fun. Jump into the power of a wave, take it for a short ride, and hope not to get ground into the ocean gravel and floor too hard. This is really as far as I ever got at the beach.
I have been lucky enough to catch a couple of major moves in stocks Magnet identified early on in their moves. Learning how to add to them during their moves, and then when to sell is the skill you need to develop if you are to surf the ones that can make the real difference in personal lifestyle.
The idea of surfing a Magnet stock is to identify a company in a real trend. Maybe it’s just starting, or maybe it’s accelerating a positive trend, which is even better! If I can identify company it scores well on value, growth, and momentum, the hallmarks of a Magnet stock I want in. I don’t need to be first. I want to to see some interest form other investors too. I want to surf the momentum of the market just like surfers ride the wave. The idea is to catch the big move, knowing you still plan to bail out before the wave approaches the shore.
By the time the wave approaches the folks just riding the waves, the surfers are already finding new waves that will carry them much further.
Many years ago, I traded in a small company with the symbol TDSC. I traded it in my clients, invested in it myself, and remember making some good money in it. Now that company has changed it’ symbol to DDD, trading 4.5 million shares per day, has market cap of $.5 billion, and is one of the darlings of this market. Yes Three D systems is in our Magnet AE Fund account and is the leader in the “new field” of 3D printing. And no! I was not smart or patient enough to own it this whole time!
I have learned it sometime takes years to the market to find my best ideas. Sometimes the ideas are not good enough--or never get found. That does not prevent me from jumping on the next good looking wave I see.
There is a new trend. Many investors simply do not invest in individual stocks any more. And while ETF’s (Exchange Traded Funds) have been around for years, their acceptance and use is increasing. Conveniently, there is a leader in the field: WisdomTree Investments Inc. ($WETF). The company is just turning profitable so it’s P/E metrics look deceiving. This is a wave we are riding, and one we expect to be on for a while.
[Image via Wikipedia Commons]
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Jordan Kimmel may be trading in these stocks in Magnet AE.
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