New Constructs’ Post

Just finished reading - The little book of picking top stocks - How to spot hidden gems by Martin S. Fridson. What an amazing book!!! As per the author, below have been the characteristics of stocks in the previous year (before topping the S&P index) (with a few exceptions) Quantitative Characteristics 1. Price volatility of the stock over the previous year (year before it topped the index) was at least 1.5 times as great as the stock that ranked 250 in the S&P index by the total return 2. Fridson Lee Statistic of the stock under consideration (a measure of dispersion in analyst EPS estimates) were 18% or greater in the previous year 3. Bond ratings of the company were Baa3 or lower by Moody's and BBB- or lower by S&P's 4. Market capitalization of the stock was equivalent to 80% or less of the market cap of the stock that ranked 250 (S&P index) by total return in the previous year Qualitative Characteristics 1. Company was under outside pressure for change. 2. Company had access to dynamic technology. 3. There were signs of potential credit quality improvement in the company (not including bond rating agencies outlook) 4. There was a presence of a dominant competitor. Which stock will top the S&P 500 index in 2025? #finance #seekingalpha #stockpicking #martinfridson #investments #topstocks #hiddengems #multibaggerreturns #multibaggers #SP500 #SP500winners #alphageneration #retirerich #returns #beatingtheindex #uncommonprofits #investsmart #futurestocks #markettrends #financialliteracy #investing #marketwatch #stockmarket

Get an instant evaluation of a stock along 3 parameters - Growth, Quality and Valuation using our new Stock Ranking tool : https://lnkd.in/gq56vtN

Uncover the true value of stocks with the P/B ratio—learn how in our latest blog post.

Get an instant evaluation of a stock along 3 parameters - Growth, Quality and Valuation using our new Stock Ranking tool : https://lnkd.in/gq56vtN

Owning only the S&P 500 is not "diversification". Sure, you own 500 different stocks in a single fund, so you're diversified within the sections of the stock market covered by the S&P, but not beyond that! You also need to own other sections of the stock market, such as small and international stocks. Historically, these different areas have outperformed each other in very long-term cycles. Owning them all will produce more consistent returns over time and reduce the risk of underperforming during a cycle where a single index is producing poor returns.

Wall Street Journal columnists threw 12 darts at stock-market listings a year ago. The biggest takeaway from all of it was that, while there were a few other winners, a single stock was responsible for ALL of their net gains. That hews to reality. A long-term study of U.S. stock returns by Hendrik Bessembinder shows that half of all excess returns came from just 83 companies. Most stocks underperform risk-free investments, which is why diversified portfolios not designed to shoot the lights out are more prudent. https://lnkd.in/g8hDpem3

The McClellan Oscillator (MO) is a tool which analyses the difference between the number of stocks advancing and declining on a stock exchange, such as the NYSE or ASX (source: McClellan Financial, 2024). Put simply, it measures the number of stocks going up or down at any one time. The MO posits that a change of 100 points or more could indicate a strong reversal is coming (source: McClellan Financial, 2024). Since May 2024, the MO went from negative 100 to positive 50 following the April 2024 drawdown and subsequent reversal when you apply the tool against the S&P500. This is a rare occurrence. If history repeats, the recent advancements in equity markets has a high probability of reversing any time from now to 60 days post the MO exceeding 100 points (see: 2002, 2008, amongst others) (source, GOT, 2024). Indeed, tools and models are not perfect though will history repeat this time, too? Follow me for daily short financial updates.

The McClellan Oscillator (MO) is a tool which analyses the difference between the number of stocks advancing and declining on a stock exchange, such as the NYSE or ASX (source: McClellan Financial, 2024). Put simply, it measures the number of stocks going up or down at any one time. The MO posits that a change of 100 points or more could indicate a strong reversal is coming (source: McClellan Financial, 2024). Since May 2024, the MO went from negative 100 to positive 50 following the April 2024 drawdown and subsequent reversal when you apply the tool against the S&P500. This is a rare occurrence. If history repeats, the recent advancements in equity markets has a high probability of reversing any time from now to 60 days post the MO exceeding 100 points (see: 2002, 2008, amongst others) (source, GOT, 2024). Indeed, tools and models are not perfect though will history repeat this time, too? Follow me for daily short financial updates.

Using dividend-paying stocks as a core holding can lead to one significant challenge: performance discrepancies vs. major benchmarks. Here’s how to grow dividend payouts over time without significantly lagging the market.

Wall Street Journal columnists threw 12 darts at stock-market listings a year ago. The biggest takeaway from all of it was that, while there were a few other winners, a single stock was responsible for ALL of their net gains. That hews to reality. A long-term study of U.S. stock returns by Hendrik Bessembinder shows that half of all excess returns came from just 83 companies. Most stocks underperform risk-free investments, which is why diversified portfolios not designed to shoot the lights out are more prudent. https://lnkd.in/gZ6UV2yz