After reading Jesse Stine’s superstock book, I’ve been very intrigued by the possibility of making a living trading while not spending all trading day in front of a screen. Finding unremembered and unappreciated stocks with good fundamentals and big bases is his approach and I am beginning to see this pattern over and over in my search for these stocks. However, there is much that I need to practice as I have just started my superstock journey. For example, I still need to learn how to read financial reports and contact management to figure out a company’s earnings sustainability. I need to learn how to calculate operating leverage quickly and accurately. I need to figure out what is important in earnings call transcripts and press releases. I need to get a feel for good and bad message boards and good and bad traders on those message boards.
Now, I think that all of these things can be learned by applying the ten thousand hour rule. And of course, while I don’t need to accomplish this as fast as I can (3 hours a day, 5 days a week, 50 weeks a year would take me over 13 years to master this), I can do the necessary targeted practice to learn more efficiently.
My plan is to identify stocks of two categories: 1) potential superstocks 2)recent superstocks that have already completed their run.
I will research the potential as much as I can while applying as much as I can of what I learn by reverse-engineering, so to speak, the recent superstocks. For the recent ones, I will go back and see the earnings during breakout and the subsequent earnings. I will try to match up key words and figures from the 10-Qs and transcripts that were release before the blockbuster earnings and subsequent periods of growth to pick out what caused the sustainable earnings, whether it was increased backlog, acquisitions, or anything else. And I will also research why a superstock’s run stopped whether it was a secondary offering, huge insider selling, a messy message board, or a technical chart factor like expanding weekly ranges.
After doing these targeted exercises enough, I should be able to pick these things out in my sleep! I’ll make jesse and more importantly myself proud.