I would look for stocks that I thought were going to double or more than double in a few weeks, perhaps, or even less time than that, stocks which, when they reached their targets, I would be very comfortable selling, knowing, really, that they would then go down again, and if I wanted to buy them back, I could do so for much less than I sold them for. When I saw a stock that I thought was in that kind of position, I could just buy it, $100 worth, without hesitation.
I would also look for stocks I thought were going to take longer to go to their targets, perhaps months or even years. If their targets are, say, 50 or even more times the going price, I can just buy $100 worth, without hesitation.
Even if you don't know what you're doing, you might learn before you use up 100 trades. 100 trades is a lot of trades. Let's say you found a stock you were sure was going to go up quite a few time in a very short period - let's say you thought it was going to go from $1 to $8 in a few days - you could just go ahead and buy it. Maybe you found three or four like that. You could just go ahead and buy $100 worth of each. Then you would watch them. You might take a little break from buying - although you've only used less than 5 of your 100 trades - and watch those stocks to see if they behave the way you expected.
There will be untoward events. You'll make mistakes. A stock you bought will go up, but you won't sell it. You'll get distracted, or not know what to do, and it'll go down again. In fact, it'll go down so much your position becomes completely worthless. At that point, you'll buy a little more, at a very, very low price. Who knows what will happen, but, when you have 100 trades, you can buy on principle. The principle is, you could loose any one of those $100 bets, loose the whole $100. You could even conceivably loose all of every one of 100 $100 bets, but that would almost suggest you weren't paying attention. And the principle is, if a winning bet more than doubles your money, you can loose a whole bet a fair number of times and still profit. The principle is, the stock market is a casino, but it's different from other casinos because you can win, win big, win again and again, and nobody will come after you. I mean, you need to be a little bit conscientious, and not take excessive advantage, but the fact is the stock market is incredibly creative, and when you win chances are it's because some big general good was involved. For example, a million people might get their morning coffee every morning for a year as a result, in some small part, of your investment. Or a new and fabulous car might hit the road, and give everybody a thrill. You name it. I mean, the casino is creative, too. I've had only good experiences. But the stock market is really something. Casinos are actually just one of its innumerable components.
What clues do you look for to pick a stock that will go up eight times in a few days? What is intelligence? Most people don't know. They think it's something like a high end microchip, that processes faster. No. Intelligence is information. Intelligence agencies, agents, gather information. That's their work. Gather and analyze, but first you have to gather, and then you have to analyze. And then you have to gather more, and analyze more.
Ideas are related to intelligence. Consider the very fundamental ideas of fast and slow. What does it mean for a stock to move fast, or slow? What does it mean that a stock moved a lot, or a little? If a stock moves 20% in a day, is that a lot? If a stock goes up 50 times, what does that mean? Once you could buy it for a dollar, and later you could sell it for fifty dollars. Does that ever happen? You kind of know it does, but how long does it take? How would we actually answer that question?
Scans. You can ask the market questions: what stocks are up a lot and actively traded? You might get a list of 10. What were they like before they went up a bunch? I guarantee you they were all cheap. But what does that mean? Cheap relative to what? Well, to the dollar. Stocks trade at up to $500,000 a share. Very few stocks trade at those prices. You will, however, find a great many stocks trading between, say, $100 and $10 - mid priced stocks. What may surprise you is that a very large number of stocks trade for less than 1 penny ... a share. So, compared with the most expensive stocks on the stock market, and with a large number of mid priced stocks, quite a huge number of stocks are, shares per dollar, a great deal cheaper. They are, shares per dollar, cheap.
It comes to me. We could look at stocks trading, say, around $100, or above $100, and investigate their histories to see if they once traded at much lower prices.
414 stocks (by one measure) are currently trading above $100. That's so many I'm not sure what to do.
Well, and I love this, you can find short cuts. Apple is right at the top of the list (it's in the aas) ... and it's not a bad example. Back in 2003 you could have bought it for $1. What were the clues? Well, it was a famous name, real innovators, of something very, very big, and the charismatic CEO had been ousted, and had perhaps by then returned to the company. Something happened in the year 2000 that caused the stock to surge upward for a time, too. I wonder what that was. And I bet there was tons of cash on the balance sheet in 2003, and revenues.
So then it went up, to date, 123 times. One dollar has become $123, since 2003, or ten years plus a little. Now we know stocks can do that.
414 stocks, each with its story, even its history of low, low prices and then huge, huge gains. Looking at one example and seeing exactly what I predicted.
Starbucks. Very similar story, and reached a low of $10 in 2003, now up 9 times. It's not on the list yet because it only trades at $91 to date. But, would we have been watching? What big company stocks are down today, and making adjustments that will support a big push to higher prices in ten years or so? It's hard to think. Best Buy?
Best Buy sold for $1 in 1996, which was above its ten year low at the time, and subsequently sold above $30 for a period of ten years. But it's currently trading above $30, and that's the range of BBY's high prices - over its history, going back to 1985. Actually, BBY is, in the last few year, surging, from a low of $12 or so to today's above $30 price, and over the course of 15 years since its 2007 low price, it has surged several times from a price of around $10. As long as the fundamentals stay more or less the same - same number of giant stores, same profits from each store - at $10 the fundamentals will, apparently, start to look quite good. In fact, profits are probably improving, so the next time $10 is visited, the numbers might look very good.***
I have questions about the business. I love Best Buy, but I never shop there. Giving this some thought, having written it.
Computing is still the wave of the future, to my way of reckoning, but it's so inscrutable. How on earth will we get from our stumbling baby steps we're taking now to the full flower of computer mastery, that is my question, but, at any rate, Best Buy is positioned to play a part in that, that I would warrant. The question is, what part can I play? How can I work with Best Buy and extend my digital media powers?
*** Here's my prediction: BBY will be a bargain again within two years, and it will remain a bargain - near $10 - for maybe a year, and then it will go up a lot, above the earlier $50 high. This means we'll have to watch it. Our record-keeping methods need development. The market will, upon request, insert a chart into your page, and keep that chart up to date.
That's several stocks that are up. We want to buy something when it's down. We can ask the market: some stocks that are down, 80% below SMA200, and there are 18. Maybe all of these stocks are in or near bankruptcy. Still, we're going to study this list. But pick one, this esoteric thing at the bottom of the list, UGAZ, Velocity Shares 3x Long Natural Gas ETN. Apparently it's a stock that you can buy and sell in the market.
I can ask the market to insert an image of today's chart in my page, and always show that.
What can happen is, a stock that is very much down, cataclysmically down, can then go down just a little bit more, and it turns out that little bit is actually another 90% decline - it looks like nothing on the chart, but the price has suddenly become minute. For a brief moment the stock that was already selling at ten cents on the dollar is selling at one cent on the dollar. There's no guarantee this is an example, but if we watch it in the coming weeks, we should see some kind of paroxysm, and we might see what I just described, and then putting $100 at risk - it's at risk, we could loose it all - would make a certain kind of sense.
Coincidentally, in my imaginary lectures I've been telling my students to, as a spiritual exercise, analyze very large markets. Natural gas is a perfect example. It's certainly a very large market. It would be good, as a spiritual exercise, to be able to say, in some way, how large a market it is. I am, for an American, a conservative energy consumer, and I think I spend about $100 on natural gas a month. That's adding some things that aren't entirely obvious, but maybe I use only half that. Anyway, because it's a nice round number and somewhere in the vicinity of being representative, let's say everyone in the world uses $100 of natural gas a month. Well, that's $800 billion a month spent on natural gas, world-wide. Let's say the actual number is only 1/10th of that. With only a little bit of fuzziness we can say that's $100 billion a year ... no, ten times that amount ... spent on natural gas. Whatever the actual number is, it's going to be astronomically large.
Asking the market to update a chart of this oddity,
Looking around for some other way to get a feel for this, looking at just the price of gas, but not sure what to make of it, figured out how to get a list of oil and gas stocks, 250 of them, presumably all large companies. Divide a one trillion dollar market among them, and they each get $250 billion of revenues. That does sound completely extreme. What if I'm off by another factor of ten and they each get $25 billion in sales. That's a more normal number ... but it also sounds kind of low. Anyway, let's look at a random chart.
Advantage Oil and Gas It's in a very good position, down after rallying strongly from a big base. Target price is maybe well above 12 ... certainly within a few years. You could just plunk $100 into AAV, and then put $100 into the esoteric one as well, your goal there being to buy at some outrageously low price, like, say, ten cents a share ... and sell at $45 (or $40).
