Basic Rules of Growth Stock Investing

How to Succeed at Growth Stock Investing

It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.

William O'Neil (Founder of Investors Business Daily)

2020 was one of the most profitable years in the market.  Exactly a year ago, we had attained an all time high with $QQQ  only to face a severe decline of 1% per day for the next 35 days until the lows attained on March 23rd.  Just as quickly the market reversed course.   $QQQ  is  +71.38% since the March 23rd lows.  Some of the leading growth stocks have attained double digits in the same time period.  

$PYPL (+208.38%) and  $RH (+424.58%) have attained such gains since the  "Follow Thru"  day of April 6th 2020.  $NIO (+188.54%) gains attained since the   "Follow Thru"  of Sept 30th.  These 3 stocks are my largest positions out of the 8 that I currently own.  In order to attain out size gains in the market utilizing the IBD (Investors Business Daily) principles one must:

• Buy High and sell Higher.
• Scan for stocks that are the leading stocks in the leading sector.
• Buy stocks that have an RS ratings of 90 and higher.
• RS line on IBD stock charts that are pointing up and between 12 and 3 on a clock.
• RS line attaining all time high.  It's even better if the RS line is attaining an all time high before the price does.
• Concentrate portfolio to just a few leading stocks and do not diversify.
• Have the discipline and a routine every weekend to review 100 to 150 stocks that are leading the market.  Annotate as many charts as you can with buy points.
• Develop a daily routine before the market opens and after the market closes to review the portfolio and trade plan for every stock position taken.
• Follow the rules of cutting losses with every stock.
• Do not buy cheap stocks or stocks that have a daily trading volume of less than 500,000 shares.

Following is an interview of Mr. Jim Roppel conducted by Mr. Richard Moglen.  Mr Roppel is a hedge fund manager and a disciple of Mr. William J O'Neil.  He self taught the IBD system of trading and has remained disciplined with his daily and weekend routine of scanning hundreds of stocks.  One of the things that impressed me the most was that 80% of the money he made most money in was in just 4 names.  Monster stocks takes time and patience and one must build the position gradually over time. 

https://youtu.be/S72pwDRbK4o

Good luck trading this week.  Market is a bit extended currently and it's a good idea to start raising some  CASH  at this time.  Harvest partial profits in stocks that have attained gains of  +25% or more.   $CCIV   last remaining shares were closed off at $36.60 on Friday Feb 12th for  +161.76%  gain.  It's a stock that has gone parabolic ever since breaking out 5 weeks ago.  It needs to retrace or trade sideways to allow the 50 day simple moving average to catch up closer to the 21 day moving average.  It is staying on my watch list for the next couple of weeks.  

Happy Basic RulesB Trading!

Amin