There are various investment and trading methods as many as the number of stars, but I think that the number will be narrowed down considerably when asked about methods that have actually achieved good results and are highly feasible.
The investment method using fundamentals can be roughly divided into the value stock investment practiced by Mr. Warren Buffett, who is said to be the god of investment, and the growth stock with which the stock price doubles or triples in a short period of time. The one that I thought was particularly suitable for my personality was the growth stock investment.
Many people have published books on growth stock investment, but the methods proposed by Messrs. Mark Minervini and William O’Neil are very interesting, and I want to practice their methods and achieve good results as much as possible.
In the series of articles that I will start from this time, I would like to introduce the method of Mr. Mark Minervini, who has achieved amazing results in growth stock investment.
For the detailed information on Minervini’s investment method, please actually purchase a book and chew it firmly.
SEPA (Specific Entry Point Analysis)
Mr. Minervini’s growth stock investment method is called “Specific Entry Point Analysis (SEPA)”. First of all, I would like to introduce the five major elements that are the key to the SEPA trading method.
Some investors tend to focus only on fundamentals that take into account the company’s performance and neglect the technical movement of stock prices.
On the contrary, some traders tend to focus only on the technical movements of stock prices and neglect their fundamentals.
Minervini advocates that it is important to analyze both fundamentals and the technical movements of stock prices in order to be successful in growth stock investment, and in his long investment life, he has been paying close attention to the timing of buying and selling stocks.
The SEPA consists of the following five major elements:
- Trend: Fast-growing stocks appear when there is a clear uptrend in stock prices, and trends can be identified in the early stages of rapid growth.
- Fundamentals: Most of the staggering performance phases occur with improvement of sales, profit margin, and profit. They occur before the rapid growth phase, which is suggested early on in future projections.
- Triger for the rise: Fast-growing stocks have a trigger for the rise at a level which lures institutional investors.
- Purchase: Fast-growing stocks give you at least one opportunity to see a tremendous rise in low-risk stage.
- Sales: Even if the characteristics of fast-growing stocks are met, not all stocks will rise, and in order to protect your assets, it is necessary to forcibly cut off losses with a stop-loss order. It is necessary to identify an appropriate sales stage and secure the profit.
In the next and subsequent series of articles, I will introduce each of these five major elements one by one.
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