Exceptional Potential
Exceptional Value
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Our site identifies three types of companies: those with exceptional potential, exceptional value or those that are exceptionally risky.

April 12, 2017: We have a extremely high degree of confidence that Adverum Biotechnologies is deeply undervalued.

For more details, call us.

As of August 10, 2016, 3PM, we warn investors: Sell all growth stocks.
Buy conservative ETF hedge ProShares Short S&P500 (ARCA: SH $38.18).

Because all investments carry significant risks, there’s no such a thing as a Perfect Trade.

However, there are three essential ingredients for a great stock. All three are very rarely found in the same company, but an investment with one or two can be very rewarding.

1) Great timing.

There are two kinds of timing in the investing world. The one you’re probably thinking of is “market timing”, the strategy of moving in and out of the market or switching between asset classes based on using “predictive” methods such as technical indicators or economic data. We don’t attach any value to this strategy.

Instead of market timing, we encourage the practice of “value timing”, or buying stocks only when their price is low relative to their minimum value and selling them when their price is high relative to their minimum value. Neither we nor anyone else knows how high or low a stock will go; it is absolutely impossible for anyone to know a stock’s future value. However, we strongly believe that rational people with the ability to read financial statements and a sound understanding of the specific business in question can ascertain and identify a reliable and conservative minimum value for any company. Our “Strong Value” category of stocks contains a small handful of examples of this practice. While high-value stocks are relatively rare, particularly in this market, there are still at least a few options available to the patient investor, if he looks hard enough.

 

2) Strong financials.When investing, nothing is more important than an exceptionally strong and liquid balance sheet. Companies with even modest sums of debt can find themselves in deep trouble if and when their revenues contract, which will happen.

While everyone knows that magicians perform through trickery and sleight of hand, it is very difficult for the uninformed to spot how they perform their tricks. Financial statements operate on similar principles: they are composed to look intimidating and inviolable, and to persuade their readers not to question the company’s assertions of profitability. To quote Abraham Briloff, CPA, Ph. D (a professor, not a man of Wall Street), “Financial statements, like fine perfume, should be sniffed not swallowed.” To learn more about financial statements, send us an email; we’ve written an extensive brochure on the subject, titled “The Investor’s Guide to Exceptionally Safe Investing”.

 

3) Quality management. Top-level management of every sufficiently large company has only one goal: to increase their personal wealth as much as possible. They care about enriching their shareholders only as much as they themselves are shareholders of their own companies. It is foolish to trust such men with your own finances. Therefore, be a discerning investor, and do not be afraid to get rid of a stock whose management is enriching themselves at the expense of the company, even if it means taking a loss.

Take a look at our three categories of stocks. Let us know what you think.