Next 10x Stock Winner

[hanera]

The opening post is to identify small cap (market cap $1B to $10B) that have the potential to return 10x over 10 years through purchasing the underlying (not long calls or trading), also not talking about our investment philosophy, whether you believe can or can’t is not for debate here. Note that we are not interested in discussing mega cap, mid cap and micro cap in this thread… should open another thread if want to discuss.

So far, UBNT and VEEV are worth betting $50k on. Jil did his due diligence well. Still reviewing these other potentials UBNT is a low cost disrupter to CSCO and VEEV is a niche player that can disrupt CRM.

DATA - Business analysts software products, grow to specialized software giant like ADBE?
IRBT - Robots for cleaning chores in a home, can it morph into clean anything anywhere? AMZN for cleaning?
TDOC - Telehealth platform between physicians and patients, how much more sophisticated than FaceTime + yellow pages?
SHOP - Cloud-based MCP (multi-channel commerce platform) for SMEs, alibaba or CRM or AMZN potential?
CRUS - Audio chips, can it do something like NVDA for graphic?

Off topic, micro-cap is near impossible to assess, kind of like shoot and hope for the best, I limit max investment to $10k So far $7.5k in LQMT, now worth $30k.

[wuqijun]

Ok if anyone on this forum is brave enough to put at least $50k into any of these small cap stocks, let us know!!!

[Jil]

@wuqijun

I’m not following the market efficient theory at all.

If you believe your statement “All these things have already been priced in. Current prices reflect that” means market is efficient.

1. Intelligent investor, 2) Margin of Safety and 3) Investment Checklist (book) say market is not efficient, but over reacted on news, either high with hypes or too low with negative news.

This is where our Famous Investor Buffet pitch in to make history. See how Apple went down from $138 (Icahn sold his stake) to $94. Between these two prices, only information was spread by Icahn “Apple is not attractive any more and I sold my stake”. Seeing Apple is 30% down, and 200B cash reverse abroad, Buffet invest 18B which made Apple to go back $150 now. Buffet ultimately made 9B.

The above is the proof for Market over reacts with negative hypes - not priced correctly - bringing down Apple price when Icahn left.

Now, I am researching DPZ, brought down heavily. However, the dividend is 1%. **DPZ is too good buy at RSI 22.92. ** I do not provide such hint normally, but here to prove that market is inefficient. DPZ is getting into good buying level. I need to find some money to buy Monday.

https://www.reddit.com/r/investing/comments/6qia00/why_did_dominos_dpz_go_down_so_hard_this_week/

I have bought heavily on QCOM as the price hit lowest range. Market over reacted on legal dispute with Apple, but company is too good in many areas. Two days before I bought 420 QCOM stocks at $52.30 (whatever excess money I had) ! This brings me 4.3% dividend yield.This is bound to go up as long as economy is bullish.

@wuqijun

There are thousands of hedge fund and money managers who spent tons of money in generating the winning stock pick. You think just by reading a couple books you can gain an edge over them?

Analysts are paid to market the companies. Hedge fund and Money managers are working on commission (Millions). They promote equities based on their commission, but not based on the interest of investors !

Buffet has proved, with 1 M bet, Hedge Funds failed to beat S&P over 10 years.

Read “Margin of Safety”, Seth Justifies why Hedge fund and Money managers failed to win. With all due negligence, and with exceptional software like Bloomberg Terminal ($24000/month subscription), they do not win over S&P as their aim to maximize commission money.

@wuqijun

You think just by reading a couple books you can gain an edge over them?

Books are the source of knowledge. Right from High school to Graduate schools, like Stanford, they teach from books. This make the difference in people coupled with individual skills. Every student learn from book, apply the knowledge gained (in any field) and achieve it by their hard work.

Yes, It is possible and many achieved it consistently for 10 years. IMO, Books are guiding us, but ultimately our intelligence, due diligence (and experience ) helps to maximize the returns. I strongly believe in it.

@wuqijun

All your research might enhance your knowledge, but ultimately it’s a waste of time if you are trying to gain an edge in beating the market.

One correction: I am not trying to beat the market,which I feel easy during bullish run, but trying to maximize my return using the knowledge I gain.

[Jil]

@wuqijun

Ok if anyone on this forum is brave enough to put at least $50k into any of these small cap stocks, let us know!!!

At various times, I exceeded the limit, by slowly adding them until peak. I used to start with 10k and keep increasing to 25k normally, exceptional basis I go to 50k.

Here are records pulled from Fidelity, almost held them for an year.

Since I wanted to get qualified dividends (for less tax), I moved my picks to dividend companies.

[wuqijun]

What I meant was that you are not going to have any edge over anybody by doing a lot of this kind of research. A monkey who blindly bought 10 other small caps might end up better than you!

There is only one trick to this, which is to buy in bulk! Quantity over quality. So someone who blindly bought 10 small caps at $1M would likely do better than your well researched portfolio of $250k.

However, I don’t believe in efficient market theory, because you can gain an edge over other investors through some other way, just not through this kind of research that you are doing. I had a big edge over many people for being in the tech industry and knowing the right people. A lot of people were not willing to invest in FB or TSLA because they don’t personally know the stakeholders. Because I do, I had the advantage.

[wuqijun]

Also, I strongly suggest to you that you should go with a buy and hold strategy. You don’t sell anything just because it went up 500% or came down 90%.

[hanera]

@wuqijun

Also, I strongly suggest to you that you should go with a buy and hold strategy. You don’t sell anything just because it went up 500% or came down 90%.

Jil has yet to realize WB’s the other winning formula is to defer if possible don’t pay Uncle Sam. So far, he has only internalized the margin of safety rule.

Also, he is not a Chinese, he doesn’t understand, 良禽择木而栖,良臣择主而侍. Btw, did you apply that to your career?

[wuqijun]

Not at all. First off, I only like to be my own boss and don’t like to work for other people. So, I was never a good subordinate, no matter what kind of boss I worked for.

[hanera]

@wuqijun

Not at all. First off, I only like to be my own boss and don’t like to work for other people. So, I was never a good subordinate, no matter what kind of boss I worked for.

Well, that mean is, 干活不由东, 累死也无功

[BAGB]

Is Steve Jobs a good employee? I suspect that he may not be a good leaf or mid level employee. But the thing is he never needed to be an entry level or mid level employee.

Bezos was a good employee though

[wuqijun]

That’s a weird adage. Never heard of that one before. But anyhow I did what I had to do to accumulate enough capital so now I get to do what I want without the need to work for anyone else.

[Jil]

@wuqijun

A monkey who blindly bought 10 other small caps might end up better than you!

Already Warren Buffet proved such monkeys win over Hedge Fund and Money managers.

@wuqijun

What I meant was that you are not going to have any edge over anybody by doing a lot of this kind of research.

Research educates me ! It is my habit to research and improve confidence on my decision. IIRC, around June 6th I was lamenting all Nasdaq stocks are going crazy. I failed to see that is one of the peaks ! Wherever I do research my chances of losing is less.

@hanera

@wuqijun

Also, I strongly suggest to you that you should go with a buy and hold strategy. You don’t sell anything just because it went up 500% or came down 90%.

Jil has yet to realize WB’s the other winning formula is to defer if possible don’t pay Uncle Sam. So far, he has only internalized the margin of safety rule.

I admit that I can not match both of you on long holding. The key is identifying good companies at young startup or 1B-5B range.

Since my friend held SUNW, his wealth came down from 2M to 200k during dot.com crash.
Since Hanera held AAPL, his wealth increased

Marcus has listed those. How will we identify which is going to be like next AAPL for 20 years from this list? There are 10000+ companies are there, which is going to be next one? How do we filter and come to a conclusion? That is research and experience. It is really hard.

[wuqijun]

You can try to buy 100 of those companies at $50k each. Maybe one out of those 100 will become the next Apple. If you are lucky.

[marcus335]

I’d avoid CUDA. They are known to offer low pay and hire anyone that’ll agree to it. I can’t imagine them being innovative.

[hanera]

@Jil

I admit that I can not match both of you on long holding.

Depends on how much faith you have in your own judgement and due diligence. IMHO, if Mr Market is moody, just buy, shouldn’t worry about it declining below your initial purchase price. I started off purchasing LQMT at high 30s cents, average all the way down to 7 cents, and then start selling some when it passes 28 cents, now average cost is about 11 cents. LQMT is trading at 30 cents now Ideally wanted to own $10k worth but if Mr Market is moody, I double up and sell back to him when he is happy mood. Frankly, I have no idea whether LQMT would be insolvent or become big, just like it because of Terminator Management keeps diluting the ownership, very irritating but held on, now seems ok with Prof Lugee Li on board.

To put it bluntly, prepare to lose all for such bets. Allocate some % to bet on such micro-cap and small cap, prepare to lose them all. My allocation for micro-cap is $30k. Other than LQMT, still can’t find another one yet, so sitting on mostly cash.

[marcus335]

Is it more risky to roll the dice on stocks like LQMT or use options to create leverage in less risky names? Which produces a better return?

[Jil]

@hanera

@Jil

I admit that I can not match both of you on long holding.

Depends on how much faith you have in your own judgement and due diligence. IMHO, if Mr Market is moody, just buy, shouldn’t worry about it declining below your initial purchase price. I started off purchasing LQMT at high 30s cents, average all the way down to 7 cents, and then start selling some when it passes 28 cents, now average cost is about 11 cents. LQMT is trading at 30 cents now Ideally wanted to own $10k worth

I need to get trained more to come to that level, long holding. I would have done that with IRBT.

I strictly do not buy penny stocks,less than $1, like LQMT.

The lowest stock price I paid so far is for EVOL at $4.90. This is mainly for 8.92% dividend return holding 1025 stocks. Next one I held, not now, was WVVI, max stock held 2000.

@marcus335

Is it more risky to roll the dice on stocks like LQMT or use options to create leverage in less risky names? Which produces a better return?

I do not know about LQMT, Avoid penny stocks like this. One of the good stocks I failed to buy is VG

[hanera]

@Jil

I strictly do not buy penny stocks,less than $1, like LQMT.

The lowest stock price I paid so far is for EVOL at $4.90.

EVOL is a penny stock too Market cap $61M less than LQMT’s $264M. LQMT is 4 times larger than EVOL. Penny stocks refer to micro-cap tiny company not its stock price. Stock price can be easily adjusted by reducing or increasing the number of outstanding shares.

[quote=“marcus335, post:77, topic:2789, full:true”]
Is it more risky to roll the dice on stocks like LQMT or use options to create leverage in less risky names? Which produces a better return?
[/quote]IMHO, less risky to trade options for mid- to mega-cap stocks.

[Jil]

@hanera

EVOL is a penny stock too

I agree with it as investopedia says “The term penny stock has evolved with the market. In the past, penny stocks were stocks that traded for less than a dollar per share. The SEC, however, has modified the definition to include all shares trading below $5”

I should have avoided such. Any way good lesson to me, soon get rid of that EVOL.

[hanera]

@Jil

The term penny stock has evolved with the market. In the past, penny stocks were stocks that traded for less than a dollar per share. The SEC, however, has modified the definition to include all shares trading below $5"

For whatever reason, SEC sticks with their definition and force companies to split or combine shares so that it won’t fall into certain category based on their definition.