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[Investing 101] – How to Pick a Winning Stock 100% of the Time

13 Wednesday Apr 2016

Posted by Sudarshan Sridharan in Investing 101

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100%, AAPL, amazon, AMZN, Apple, basics, beginner, beginners, bill gates, blog, buffet, Business, ceo, choose, chose, faang, fang, financial, followers, for beginners, GOOG, Google, How, Invest, Investing, Investment, Investor, Investor Letter, Investors, make, money, monies, mzn, Netflix, NFLX, pick, prime, quora, retire, samurai, scump, seo, sridharan, Stock, Stocks, sudarshan, sudarshan sridharan, Tag, Tags, Tesla, Ticker, Tickers, to, Trader, tube, Twitter, warren, warren buffet, win, winner, winners, word press, Wordpress, you, youtube


First of all, I’ve gotten quite a bit of feedback since I started writing the blog again. Due to the feedback received I will be writing about Virtual Reality Stocks, Under Armour and Michael Kors, and expediting the Investing for Beginners series. This article was going to be apart of one MASSIVE Investing for Beginners article, but I’ve decided to make it a series. I will be adding to these as I go, and then at the end of the series, I will be compiling all the articles into one big, edited, article.

I know I’ve gotten behind on the 30 articles in 30 days, but I’m really trying to get back on track with these articles, and with school work, so it’s been a bit of a grind.

I know that this article is totally out of place in the series and should be like the 3rd or 4th article in the series, but honestly, I’m not really feeling like explaining the primitive basics of how the stock market works right now (midnight), so enjoy this article.


As I’ve said before, I’m more of a, “Use your heart not your head” type of investor. That philosophy takes on different styles of investing every time, but for this article I will be sticking to one specific style.

The stock market isn’t something that you have to study for years and have a natural talent for, it’s just like a game – play it long enough and you’ll learn everything about it, and become extremely skilled at it.

All you do is look for stuff you use in your everyday life. Then you ask yourself a couple questions, and then you decide whether or not you want to buy the stock by asking yourself a few more questions. It might seem really dumbed down and simple, but that’s because it is.

This is one of the easiest ways to find a stock that you know you will not lose money in (as long as you don’t invest in Financials like banks, or Healthcare stocks, you should be fine). Why? Because these companies are NECESSARY for the world to go on. Chances are, if you use something, and your friends use something, then the majority of everybody uses it.

This is how  found stocks like Netflix, Tesla (although it wasn’t necessary or mandatory at the time when I found the stock in 2012), Amazon, Adobe, Microsoft, Apple, Google, FaceBook, Visa, Nike, Under Armour, Activision, Electronic Arts, and a lot, lot more.

If you’re reading this and going, wait, all this kid did was spit out FAANG (Jim Cramer’s acronym for the super successful tech stocks that are holding the Nasdaq up), and a few other stocks that are super obvious, well you’re right. Except, I found every stock in FAANG 3 years before Cramer (Netflix being the last of the stocks that I identified in 2012). How? Well I just asked myself these questions:

  • What do I use everyday?
  • Do other people use it everyday?
  • Can the world function without it?
  • Will people feel a void if it doesn’t exist?
  • Do all my friends and family use it or want it?
  • Will it impact them if it disappears?
    • If yes to all the questions above, proceed to find the items creator and check if they have a stock.
    • If they have a stock, ask yourself these questions:
      • Have the recently announced earnings?
      • Have they shot up a lot recently(50% or more in the last quarter is how I define it, you’ll come up with your own definition as you learn)?
      • Are they expected to do poorly in earnings?
    • If the answer to any of the above is yes then I don’t recommend buying the stock. The only times I’ve broken these rules and still made money is with Netflix every January when they report earnings and have over inflated comps which analysts never expect and the stock shoots up (check out my post from Jan. 2014 when the stock went up 86% the week I recommended buying it), and with every other stock in FAANG, as well as a few other trades. However, seeing that this is [Investing 101], I’m going to assume that you don’t have enough experience to make that kind of call yet.

Now that you’ve asked yourself all these questions, I recommend blindly going to your brokerage of choice and putting in an order to take a ~5% or less stake in the company.

When I was 11 (I think this may have been before I turned 11), in 2011, I made a list of 3 companies the world couldn’t go on without. The list was:

  • Adobe
  • Microsoft
  • Google

Are you surprised to see Microsoft and Adobe on that list? Well now I’d probably replace Microsoft with FaceBook, and keep the rest of the list the same. Either ways MSFT has done spectacularly in the last 5 years, as has ADBE, and GOOG/GOOGL. Amazon (AMZN) was a strong contended for the Microsoft slot until Jet.com came out. Now you have Ali-Baba spin offs, and Jet.com to cover just about all of your online shopping needs. While no one under 35 uses FaceBook anymore for purely social media purposes, it’s used by just about every business, hosts a plethora of games, and is leading the way in virtual reality development (and in about 50 [sic] other fields as well).

Anyways, the reasoning behind Adobe was that everyone used PDFs. Gamers everywhere used Flash, and Youtube is based on Adobe Flash. Imagine if Adobe went under, the few months (at least weeks), you’d be without Youtube would be devastating for people everywhere.

The reasoning behind Google was (and still is) that it is used by everyone, for just about everything on the internet. Teachers say, “Google it,” not, “Bing it,” or, “Yahoo it,” (Yahoo, right that still exists), entire businesses are built off of Youtube, manipulating Google Search Engine Results, Google Blogs, AdSense, Scholar, Wallet, Play, Android, literally everything that is anything, Google was involved somewhere along the way.

Now if you’re in a betting mood, you can take a chance on companies that have fallen on hard times. I recommended a company called Aeropostale on Quora a few weeks ago. ARO had fallen from $30 to $0.20 cents. I figured that I saw enough Aeropostale shirts floating around school that it was still relevant, and that it couldn’t possibly just go under like that (and even if it did, oh no, you just lost $0.20 a share). I went to school and asked 10 girls when the last time they wore Aeropostale was.

I was surprised by the number of people who’d worn it within the last week (7), so I figured YOLO, lets go for it. On April 4, the stock rallied to above 50%.

I’d give some more anecdotal evidence about why these simple questions are so good at getting the job done, but you won’t believe it until you see it for yourself. Go ahead, track a stock for a couple weeks (or months), that you picked using this method and report back with the results.

I don’t recommend using this for banks, healthcare stocks, or social media stocks because they are so fragile and move due to far too many other reasons. Social Media stocks are incredibly hard to make money off of because most social networks don’t have proper advertising and revenue structures in place.

I try to respond to every email I get, but there are an awful lot of them, and only one of me, so give me a few days and I’ll get around to you. I hope this article was helpful in some way, and if it was, please rate it and leave a comment.

I’d write some more, but it’s almost 2 am here, and even if I did go to bed at 9pm last night, I’m feeling tired, so good night, and hope this helped!

 

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China’s Down More than 25% in the Last Month, Is it a Good Time to Actually Bet ON China? Exploring the YINN

10 Friday Jul 2015

Posted by Sudarshan Sridharan in News

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Tags

and, buffet, China, Finance, make, making, money, Primepick, Stocks, warren, warren buffet, Wordpress, yang, yin, yin and yang, yinn


Much like the Yin and Yang that represent good and evil in Chinese mythology, their financial counterparts represent how China as a whole is doing. For those of you who do not know, the YINN (Direxion Daily China Bear 3x Shares ETF) bets on China. For every one percent China goes up, you make three times that much money. The YANG (Direxion Daily China Bull 3x Shares ETF) does the opposite, it bets against the Chinese market, and every time it goes down 1 percent, the stock goes up three times. Over the past 30 days, China has fallen more than 25%. This chart of the SSE Composite Index (an index of all stocks traded in the Shanghai Stock Exchange) from Yahoo Finance clearly shows the decline in Chinese Markets from its peak on June 5.

Screen Shot 2015-07-10 at 11.25.21 AM

The red line is the S&P500s performance over the same time period of 3 months.

So what does this mean for YINN and YANG? Well, YANG has fallen from over $2500 in 2011 to a little less than $80 right now. It’s a big mover in the way that it has potential to make $15 in a day, and fall $20 the next, but its entire stock price revolves around the Chinese Market doing poorly, and that’s a terrible bet to make; especially since China has been one of the fastest growing markets in the world for the past decade. Right now YINN is in an incredible position: its fallen from over $65 in April, to $30 this month. It’s a steal.

Why?

Let’s take a look back in history when the Oracle of Omaha – Warren Buffet – bought thousands of shares of CocaCola (Ticker: KO) after its stock was decimated by health concerns and factory malfunctions. His philosophy was simple:

The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.

Like that, we want to buy excellent stocks at extremely low prices and sell at an incredibly high rate. In essence, buy low sell high. China will recover, it has to. China isn’t undergoing a recession, it’s undergoing a market correction. As soon as China picks itself up, YINN will pick up too. It’s a stock betting bull on one of the best markets in the world, and it’s a steal.

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So is Yahoo really back on top? Let’s find out….(Yes it is and here’s why)

14 Tuesday Jan 2014

Posted by Sudarshan Sridharan in News

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Tags

Chart, Charts, Death Cross, Golden Cross, Google, Google Finance, Hedgefund, Investing, Investor, Investors, Marissa Mayer, Mayer, money, Stock, Stocks, Tesla, Ticker, TSLA, Tumblr, Wordpress, Yahoo, YHOO


Well first of all WordPress has been having problems including a “Hack-Attack” by the group Anonymous who seized the data of anyone who logged into or viewed WordPress Blogs/Sites after Christmas. This was limited to a few sites, but I just had to make sure. Google rates WP and the Prime Pick with a safe rating again so everything is good now!

Alright so about Yahoo, it’s a big article, so take your time and enjoy…..!

ImageSo this is Yahoo’s (Ticker:YHOO) 1 Year chart since Marissa Mayer took over. Just look at that increase. So what happened? Well first of all I read on  either Seeking Alpha or ValueWalk that some scientists had found out that stocks of company’s with attractive male or female CEO’s saw close to a double in stock price within the first year of the CEO joining. Well I really wouldn’t accredit Yahoo’s amazing success to Marissa Mayer’s looks since she’s only appeared on one issue of Vanity Fair. Rather I would say that she joined a company that is re-entering phase 2 (at least for its stock). Phase 1 was rehabilitation. Image 1.2 (below) will show you the 5 year chart, and that the company was already starting to stabilize and just needed a push.

Image

Mayer saw how the very top of Google attacked it’s business plan and how it stuck to it ’till the end. Having been about as close to the top job as possible, Mayer helped plan and buy companies that would eventually make Google billions of dollars in revenue. She simply took this abundant knowledge and restructured Yahoo. From personal experience I can tell you Yahoo was already starting to attract younger users and appealed to a wide variety of people. Mayer set in place a very structured FIVE YEAR business plan and started to work Yahoo back into users’ minds. Under Mayer, Yahoo but Tumblr, then other social media sites, bringing their advertising and money making plans to close to a billion users worldwide. 

Yahoo is currently in phase two of it’s stock trend. Phase two is when the stock starts to go upward and starts to go up at a ridiculous pace. This can last for a few month, or even a few years (think Apple, possibly Netflix.)! So this is the time to buy, am I telling you this after Yahoo is gone up over 300%? Yes I am and I’m sorry, but $15.15 to $41.14 isn’t exactly game breaking for a stock that’s going to go up to heights of Google (I can only hope. I correctly predicted to a “T” the month that Apple would fall from its staggering $700.00 stock price. This was because Apple did EXACTLY what it said it would. I am only scared that Yahoo won’t stick to the business plan that it has promised, which would then lose millions billions of dollars for the company. Of course, Google broke its business plan and made a $800 run and is still growing, but Yahoo can’t do that reasonably). 

Last month (December) Yahoo surpassed Google in web searches! That, according to my research, hasn’t been done in almost 6 years! Yahoo is DEFINITELY growing, and I hope that the facts that I have given you (few but true and major) will help you in deciding when to get into Yahoo. I made money on Twitter somehow, despite being a staunch believer that market hype will not make a company that is $-246 million dollars in the hole a profit. I was wrong in that case, but Yahoo has not only Market Hype, but also actual money and revenue coming in from SO MANY sources! And another plus is that it doesn’t (According to its press release 3 months ago), sell your email to 3rd party spammers! 

I’d place a buy order at $40.51 for Yahoo (that should be the safest place for Yahoo to buy), a sell order at $35.29 (the reasoning behind this is that Yahoo does have a chance of falling big before recovering, like Tesla, Netflix, or Apple. In order to prevent massive losses, $38.40 is the widely accepted number, but I disagree because Yahoo has fallen up to eight dollars in a day before recovering to end days in massive gains! That is the lowest it has fallen, so I say six dollars from it’s current price, would be reasonable), and then I’d buy some shares of Yahoo tomorrow at 10:01 am (That is a very calculated time, I’m not even joking.). 

Bottom Line: Yahoo is a slowly growing company that is 1 year into it’s 4 year growth stretch (look at 200 day moving average) and I’d say if you don’t buy it now within the next month, you’d easily be losing $50 – $60 dollars!

UPDATE:

I was examining Yahoo’s charts closely, and I just realized something: A death cross or a Golden Cross occurs every other time the crosses happen. It also happens about every 4 years. By that standards, Yahoo is due for a death cross between 1 1/2 to 2 1/2 years from now because a golden cross has just happened. It may not seem like much, but the price is highest right before the cross occurs! This means that the next time the Cross occurs, if Marissa Mayer’s is able to avert a Death Cross, then we can safely guarantee that Yahoo has entered its second “Golden Age” and then I’d recommend dumping all your money into Yahoo. I’m a day trader, not a long term trader, but for you long term traders, I would buy Yahoo now while it’s super low!

Image Hope I have been able to help at least a little! Enjoy, and invest on!

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