Page 534 - How to Make Money in Stocks Trilogy

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• C HAP T E R •

Institutional Portfolio Ideas

The 31-year performance graph from inception of our weekly Leaders and Laggards
Institutional Service is shown in this chapter. It proves what is potentially
possible over a long period if you concentrate on innovative new entrepre-
neurial leaders that have a unique new product that’s better, faster, or
cheaper than others in their field . . . and you face up to and eliminate your
laggards and possible mistakes before they are allowed to deteriorate into
huge losses.
Here are 10 charts of many of the better performers with annotations
showing key facts known at the time each stock was first added to our ser-
vice in, around, and following the general market follow-through of the
March 12, 2009 market bottom.
You’ll note, half of these stocks, after the third or fourth worst market col-
lapse in 100 years, had an average P/E ratio over 45, 6 of these innovators
had an average return on equity of 45%, and all 10 averaged having their
IPO in just the last 12 years.
Most averaged earnings up 40% in their latest quarter plus powerful
earnings growth in the prior two or three years. All had unique industry
leading products. So, you see . . . the winner’s secret is to always insist on and
combine outstanding fundamentals together with sound chart patterns
under accumulation during an uptrending general market.
The 2008 bear market was twice as long and deep as typical bears. The S&P
500 fell 58% in 17 months. Nearly all stocks were therefore coming up off the
bottom of 50% to 80% or 90% declines. So, Amazon, Vistaprint, Priceline,
Baidu, and Ctrip were all “potential deep cup-with-handle bases,” just start-
ing up the right side of a cup, somewhat like Xerox in June 1962.

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