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Big Trends – How to Find Them, Ride Them and Get Off

Howard Lindzon Ivaylo Ivanhoff Founder and CEO of StockTwits @ivanhoff

@howardlindzon

howard@lindzon.com

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Finding Big Market Winners

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The Harsh Reality

1 in 3 Stocks Eventually Decline 75%

from Their IPO Price;

Only 1 in 4 Stocks Outperform the S&P

500 during their lifetime

Stock Picking Matters

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Where to Find the Winners?

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What Do big Winners Have in Common?

Many of them have explosive earnings and

sales growth;

Many had new product/service that was loved

by their customers;

Many looked expensive on the way up (and

paradoxically – cheap on the way down)

But…

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All Big Stock Market Winners

Spend the Majority of Their Time on the 52-

week high list (and better yet, the all-time high

list)

Substantially Outperform market benchmarks

in good and bad times

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Price Is the Most Important Part of Catching a Trend

It doesn’t matter how smart you are; how ingenious your investing idea is; Until the market agrees with you, you won’t make a cent. Market agrees with you, when you see your stocks on the 52-week high, better yet the all-time high list;

The 52-week high list is a raw data point, which could be enormously useful if you know how to read it properly.

The 52-week high list is basically a short-cut into the minds of people, who can create and sustain trends.

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U.S. Housing Recovery Is the Market Story of the Year and It was Told by the 52-week High List Long Before It became front-page news

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The Magic Of Relative Strength

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Relative Strength

How A Stock Performs Against the Market;

Stocks That Are Holding Near 52-week highs

and Even Better, Break Out to New Highs

While the General Market Is In Correction

Mode, Are Likely To Become the Leaders of

the Next Rally

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Trades Near 10-year High while Market Is In a Free Fall

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Makes New All-Time High while Market is in Correction Mode

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New All-Time Highs While Market is Making New 3-month Lows

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In Good Markets, There Will Be Hundreds of Stocks Hitting the 52-week High List Daily. You Can’t Own Them All. How to Choose from such Big Pool of Stocks?

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The St50 List

The purpose is to Improve the Odds of Finding the Next Big winners.

It Saves Research Time By Ranking All Liquid Stocks by the Criteria that Matters:

-Distance from 52-week high;

-Relative Strength;

-Earnings and Sales Growth; Acceleration in growth;

-Earnings Surprises;

-And Most Importantly – Setup score (based on Moving averages ratios), which keeps us away from extended stocks.

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But There Is More to the St50 List – Social Data

You Could See Which of the Strong

Momentum Stocks Are:

Least followed = no one pays attention to

them; there is no hype;

Least mentioned = undiscovered gems with a

lot more potential to appreciate;

Gaining social momentum.

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Momentum In All Markets Is Interconnected

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A Glass Half Full

No matter what is

going on in the world,

there will always be

companies that will

manage to monetize

on an undergoing

social or business

trend. If you follow

the 52-week high list,

and better yet the

StockTwits 50 list,

you will know the

ones that are truly

ripe to be owned

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Ride Them Long Enough To Make a Difference

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Holding Is An Important Part

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Starbucks Might Be the Next Starbucks

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Trend Following Is Not for the Faint of Heart and Get Rich Quick Dreamers

Anybody Can Buy A Stock, but You Also Have to Hold It While It Rises In Order to Make Money

Don’t Sell Until A Stock Gives You A Reason

And Yet, Conviction Without Discipline Is a Recipe for Disaster…You Have To Stick To Your Sell Rules, No Matter How Much You Believe in the product/service

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Pruning Is Important. You Will Have Losers. Get Rid Off Them

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How To Get Off

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Have An Exit Strategy

Some Trends Last Longer Than Others, But

Sooner or Later They all Come To An End

Everything Is For Sale At the Right Price

No Gain Is Really A Gain Until It is Booked

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80/50 Rule

80% of All Big Stock Market Winners

Lose 50% of Their Move

50% of All Big Stock Market Winners

Love 80% of Their Move

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“I can calculate the motion of heavenly bodies, but not the madness of people.”

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Why Trends End

No company can sustain high growth forever;

No company can sustain high expectations forever. Anything priced for perfection eventually disappoints

Valuation Matters When Market’s Mood Shifts from Complacency and Euphoria to Doom and Gloom

Wall Street is a tireless printing press; sophisticated distribution and marketing machine. It is in the business of printing stocks that are under demand by the market

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Partial Profit Taking

Too Extended from Its Rising 200dma (40%+)

Reacts Poorly to “Good” News

Look for Sudden Increase in Short-Term

Volatility. It is often a sign of ownership

transfer – from strong to weak hands

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