|
Your personality often has a distinct impact on your approach to stock investing. Some people are aggressive and always looking for that big winner while others are conservative and methodical and looking for high percentage winners with modest returns.
In effect, some investors like to “swing for the fences” as they say in baseball. They want to emulate Babe Ruth (Yankees, 1920 - 34) and hit a lot of home runs in the stock market. The only problem is that Babe Ruth struck out a lot too.
I know a very successful aggressive investor who has a reminder in his office that Babe Ruth struck out 1,330 times yet also hit 714 home runs. This investor likes to go after stocks that could appreciate 500 to 1,000 percent.
His strategy is to find a company with (1) a new product, (2) strong earnings prospects and (3) institutional investing appeal. Some of his big winners in the past were Microsoft (MSFT) and Amgen Inc. (AMGN). His losers?
 Then, there is the single’s hitter, Ty Cobb, who won the baseball batting title 12 times and has the highest batting average of all time at .366. Cobb (Detroit and Philadelphia A’s 1905 to 1928). Cobb was a tough guy to get out.
The analogy, of course, is that investors who are good singles hitters are usually consistent with their wins. They rarely go through the agony of a big loss.
So, who do you want to be?
Ruth or Cobb?
The answer: Both.
How’s that?
Well, Cobb played in the “dead ball era” where the baseball did not carry far. So, singles and doubles were the best way to play the game. Ruth played in a later era when the ball was different and carried further. So, he did great swinging hard for home runs.
In the stock market, you want to go for “singles” when the market is “dead,” or, in other words, tough. It could be in a trading range or even a bear market. So, you want to be conservative.
However, when the stock market is “alive”, you want to swing for the fences. Right now the stock market is “alive.” It remains in an overall bull market despite the high price of crude oil and the spookiness of the terrorist war.
So, what are some stock market pitches you could go for in order to swing for the fences?
One might be MGP Ingredients Inc. (MGPI), formerly known as Midwest Grain Products. The Kansas firm buys wheat from farmers and processes it into food ingredients, such as wheat gluten and wheat starch used by food and beverage firms. It also produces alcohol products used in beverages and for fuel.
This year, MGP’s net should soar 254 percent to 85 cents a share from 24 cents a year ago. Next year, net should jump 82 percent to $1.55 a share. The stock climbed from 12 at the start of this year to a peak of 35. It has dropped back to 23. The strong earnings outlook could propel the stock higher.
A speculative play in the medical area is Neurometrix Inc. (NURO), a maker of products to diagnose, detect and monitor neurological conditions. The company produces its NC-stat System, which can tell if pain is caused by nerve root compression or something else. The stock ran from 10 last year to a peak of 40. It is now basing at approximately 27.
This year, NURO’s profits should jump 119 percent to 15 cents a share from 7 cents a year ago. Next year, Wall Street forecasts a 204 percent surge in net to 47 cents a share. In June, NURO executives made presentations at three different analyst meetings.
Other interesting plays include Metertek Tech Inc. (MEK), a maker of gas metering systems, Zoltek Cos. (ZOLT), a maker of carbon fibers used in the aerospace industry, and even Toyota Motors (TM), a producer of hybrid cars getting big gas mileage.
Interestingly, Ty Cobb -- the singles hitter -- did hit a home run in the stock market.
Cobb was an early investor in Coca Cola Co., (KO) which was based in his home town of Atlanta, Georgia. In fact, Cobb’s nickname in baseball was “the Georgia Peach.” When he passed away in 1961, at 75 years old, his estate was valued at $11 million, thanks to his investment in Coke. How sweet it is!
Note: The charts in this article were captured from eSignal. To find out more about how you can get streaming, real-time quotes from all the markets, plus streaming charts, news and Market Depth, go to: www.esignal.com.
The stock quotes in this article were captured from eSignal's Quote.com site. To find out more about how you can get streaming, real-time quotes from all the markets, plus streaming charts, news and Market Depth, go to: www.quote.com. |
|
