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ChangeWave Investing 2.0 presents a radically improved method for picking the next monster stocks while protecting profits...With ChangeWAve Investing 2.0, listeners can learn the strategies and techniques that will allow them to profit from the transformational change our economy is only beginning to experience.
Your Edge on the Market
In investing, you need only a little edge to outperform the market as a whole. The effectiveness of the ChangeWave Investing strategy in everyday buying and selling of stocks points to the impact of the edge we offer.
How effective? Well, the application of the strategy and buy/sell/hold tactics has resulted in buying and selling stocks that have delivered on average 75%-a-year growth in our model portfolio since 1995. Including the Nasdaq crash of 2000-2001.
We'll start with the basic concepts and strategies necessary for you to become a first-class "change analyst," which is crucial to your success in monster-stock hunting. Then we'll get into the blocking and tackling of Growth Appropriate to the Business Cycle portfolio management, ChangeWave style.
But before we get to the strategy and tactics, given the crazy stock market of the twenty-first century so far, perhaps we should start with why you should bother investing in growth stocks in the first place.
Posted November 6, 2001
A Growth Investment Discipline with a Fine Track Record! If you have read ChangeWave Investing, this book is not required reading. If you have not read ChangeWave Investing, I strongly urge you to read this book instead! The model portfolio that Mr. Smith operates has enjoyed ¿an average of 75%-a-year growth . . . since 1995. Including the Nasdaq crack of 2000-2001.¿ I assume the annual rate of growth is lower now, since the market has been weak since these words were probably written. Naturally, the portfolio has taken losses recently (the return is from 150 percent a year that was reported in ChangeWave Investing), but the overall result is certainly enviable. How will it do in the future? I don¿t know, but Mr. Smith is very optimistic. ¿Building a million-dollar investment portfolio is a simple game.¿ Well, I think most people would agree that it¿s not so simple, even if you have 50 years to accomplish it, unless you start with two million dollars. ChangeWave Investing is ¿a philosophy, a growth-stock-picking strategy, and portfolio management system all rolled into one.¿ Mr. Smith argues that technology will be over half of the U.S. economy by 2008, and the potential for sharp shifts in trends will be accelerated by dominance. The thought process is basically as follows. Find the biggest shifts going on in society (ChangeQuakes) which may come from economic (the light bulb extending night-time activities), technological (DSL), regulatory (end of fixed commissions on Wall Street), strategic (better business models like Dell¿s direct selling of PCs), or fad (Furby interactive toys) sources. There will also be second generation aftershocks, like HTML shifting into XML to provide more richness on the Internet. Then find the few companies with the Killer Value Propositions for these shifts that will ¿relieve pain/anxiety/stress (emotional or physical),¿ ¿deliver pleasure or hope (direct or indirect),¿ ¿satiate greed/build self-esteem/create wealth, status, or power,¿ or ¿reduce/eliminate fear/regret (provide safety, predictability).¿ Invest in the best two or three that have fine profit growth prospects. Use technical analysis to pick when to buy (typically when the 50 day moving average surpasses the 200 day moving average). If a stock tanks by 8-10% soon after you buy it, sell. If it goes up rapidly, buy more. Winnow down to own the ultimate market leader as soon as you can. Separately, you should have set a portfolio allocation for what percentage of your holdings will be in these rapidly growing stocks. You are encouraged to have a fair amount of your holdings in less rapidly growing stocks that will be more stable, but will be helped by large trends. You should also hold some cash. When I reviewed ChangeWave Investing, I predicted that there would be a 2.0 version. Having read the 2.0 version, I predict there will be a 3.0 version. There are still some important problems with this approach. One of them is valuation. As long as the trends and the technical indicators are positive, you are supposed to buy . . . no matter how high the price is. I suspect that you would do a lot better to buy the least expensive stocks in terms of their economic potential. No one can really forecast trends all that well. Another problem is a misunderstanding of growth. Like many people, Mr. Smith believes that all industries go through an ¿S¿ curve pattern. In my consulting practice, I have often been asked to look at rapid growth brought about by rapid changes, and have found that a knife-edge is a more typical pattern. In a knife-edge, the peak is reached very rapidly and then consumption drops immediately to much lower levels and stays there for some time. Getting out of stocks of companies serving this kind of demand can be quite challenging. Many will quickly fall by 95 percent or more. The book suggests using technical indicators to sell (the 50 day moving averWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.