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How to use the Hot Stocks Digest |
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Don't be fooled by the elegant simplicity
of the Hot Stocks Digest. As you can see, it is clear, concise
and easy to use. Yet it generates enormous profits when followed
correctly and with proper discipline.
Our Alpha(α)-RSM System is designed to ferret out
those stocks that have a high alpha as well as high relative strength & momentum.
Alpha is that measure of the return that is not explained by the
general market. For example, if the S&P500 has an average monthly
return of 1.5% and a stock has an average monthly return of 8.5%,
then the stock has an alpha of 7%. This 7% is the excess return
that the stock generates over the general market.
Once we have selected our list of almost 1000 high alpha stocks, we run
them through our proprietary mathematical models that rank them
based on their relative strength and momentum. We want to buy only
those high alpha stocks that also have high relative strength and
are going up at the present time. We have no interest in stocks
that are going sideways, or worse, are going down.
The "100 Most Attractive Hot Stocks" are then presented
in each issue of the Hot Stocks Digest. Their percent change over
the past 5, 10, 20 and 40 days is also shown.
Our model portfolio can have up to 30 stocks. The allocation in
the portfolio is dependent upon prevailing market conditions and
the buy/sell signals from our asset allocation models. A 50% invested
position will have 10 stocks and a 150% invested position (using
margin) will have 30 stocks. That is the maximum leverage we’ll
be using in this portfolio.
You can also use the list of the 100 most attractive hot stocks
to pick and choose and build your own personal portfolio. One strategy
is to buy stocks that appear close to the top of that list. Hold
a stock as long as it in the list of 100. When a stock drops out
of the list, sell it and then buy again from the top of the list.
This is just one way of using the list. You may prefer to use it
differently and tailor it to suit your personal taste. Another
way to use the list is to buy any stock that makes it to the top
20. To make room in your portfolio, you may have to sell some stocks.
We recommend you sell the lowest ranked stocks and buy the top
ranked ones. This way you will be rotating out of weaker stocks
into stronger ones.
As a new subscriber you have two options when you start building
your portfolio. The aggressive option is to go ahead and buy all
stocks in the model portfolio. This way you'll be fully invested
instantly. Even though some of these stocks may be up 50-100%,
it doesn't mean that they cannot go up another 100% or more from
these levels. The conservative option is to buy only the new stocks
added to the portfolio each week and leave the rest of your portfolio
in cash. This way, it'll take you a few weeks to become fully invested.
You'll get the Hot Stocks Digest every Monday morning via e-mail
or you can retrieve it through our internet website. When you start
trading using our recommendations, you'll discover the Hot
Stocks Digest gives you greater control over your profits. And triple-digit
gains are not rare! Time and time again, we've selected stocks that
have realized over 100% gains in just a few short months.
You don't have to be a mathematical genius to see the enormous
advantage in small stocks. That's why I am so excited. For the
next several years, these explosive investments will post the biggest
gains! But again, you have to know which ones to buy. Not every
small stock is going to do well. In fact, most of them aren't worth
your trouble. I can't stress this point too much. To achieve both
high gains and safety, you must invest only in the highest-quality
small stocks.
With the Hot Stocks Digest, you can get started at any time.
You don’t have to worry about the market being too high
to buy or too low. This stable service will remain in favor
over many market cycles.
The model portfolios are designed to provide a sufficient level
of diversification by investing in at 20 stocks. Even as these
stocks are considered cornerstone investments, they do carry
risk when you look at them on an individual basis. However,
if you have a diverse portfolio of such stocks, the volatility
is reduced significantly while the returns remain almost the
same.
By dividing your risk investment capital over a large number
of issues, you are not vulnerable to decline in a single stock
or a few stocks in the same industry group. This system of
diversification keeps your reward/risk ratio substantially
higher than if you were to buy only a handful of stocks.
For example, if you have 20 stocks in your portfolio and 4
of them decline by as much as 25% each, your total portfolio
loss is only 5%, provided some of the other stocks in the portfolio
don’t make up for this small loss.
As a new subscriber you have three options when you start building
your portfolio using the MODEL PORTFOLIOS :
1. The most aggressive option is to go ahead and buy all stocks
in the model portfolio of your choice at their current prices.
This way you'll be fully invested instantly. Even though some
of these stocks may be up since we bought them, it doesn't
mean that they cannot go up even more from these levels.
2. The more conservative option is to buy only those stocks
that have a new buy recommendation for that week and leave
the rest of your portfolio in cash. This way, it'll take you
a few weeks to get fully invested, but you'll be buying each
stock at the most appropriate time and price.
3. If you decide not to follow the model portfolio, you may
use this list of 100 most attractive stocks to pick and choose
and build your own personal portfolio. One strategy is to buy
stocks that appear close to the top of that list. Hold a stock
as long as it in the first 100. When a stock drops out of the
first 100, sell it and then buy again from the top of the list.
This is just one way of using the list. You may prefer to use
it differently and tailor it to suit your personal taste.
In each model portfolio, the percent allocation is listed next
to each stock. You can use this allocation information to compute
the number of shares to accommodate your personal portfolio.
For example, if you have $100,000 to invest using this methodology
and the percent allocation for each new buy is 8% then you
will buy $8000 worth of each stock.
When you receive the next issue of the Hot Stocks Digest, check
the model portfolio. You'll notice that the new sells in each
issue are highlighted in bold. Sell a stock when a sell signal
is given. Then purchase the new recommendations which are highlighted
in italics. It is as simple as that.
SET
REALISTIC EXPECTATIONS
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Can we expect 100% plus returns every year? It would be great,
but it just isn't realistic. But you can still make 100% returns
or double your money every 2 years. That is why we need to
fully invested in the best high-alpha, high-RSM growth stocks,
when the reward/risk ratio is high.
Many investors, particularly those with less than 5 years experience
with their own money in the market, have unrealistically high
expectations regarding returns. This is perhaps the biggest
source of frustration for newer investors.
Over a 10-year period, stocks will be up only about 65 percent
of the time on average. The rest of the days are spent drifting
sideways or falling. These negative periods can last months
or even years. The good news is that our asset-allocation systems
will keep us out of the stocks when risk is high or odds are
not in our favor.
Successful investing requires a mental determination and emotional
commitment to stay invested for at least one market cycle,
which usually lasts four to six years. Often investors lack
the stamina to hold out through high period of volatility.
They bail out, usually at the worst possible moment, forgetting
that the extraordinary returns generated by small-cap stocks
will eventually compensate them for the risk or volatility.
Please remember ... patience and discipline are the two most
important cornerstones of successful investing. Don't expect
miracles or think you'll get rich overnight. Also, don't let
the day to day market volatility and ups and downs bother you.
That is all part of investing in the stock market. Focus on
the longer-term. Look at the bigger picture. Think where you
want to be 5, 10 or 20 years from now.
Generally, the longer you can leave your money in the market,
the more risk you should be willing to take. You also need
a proven investment strategy. Without a plan, investors often
jump from one idea or philosophy to another.
Jumping around from one investment program to the next can
be detrimental to your wealth building efforts. Once you have
found a good system, like the Hot Stocks Digest, try it for
at least 2 years before passing judgment on it.
Don't expect to make money each and every week. When faced
with the inevitable down periods, don't lose patience and throw
in the towel. Hang in there. Wait for the right opportunities,
because sooner or later, they will surely come. We at Hot
Stocks Digest hope to make your investing profitable and enjoyable.
FREQUENTLY
ASKED QUESTIONS
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Q. When is the Newsletter Published?
A. The Hot Stocks Digest is published every Monday morning and is available
on our web site by 7:00 a.m. eastern time. The e-mail is sent around the
same time. The prices in the newsletter are as of the last business day
of the previous week, usually a Friday.
Q. Is there a telephone hotline?
A. No. Since this is exclusively an internet and e-mail newsletter, there
is no telephone hotline.
Q. Do I buy at the market or at the price listed in the newsletter?
A. When you get the newsletter and decide to buy a stock, just buy it at
the market or at the ask price. In some cases you will get a worse fill
than the price listed in the newsletter and in other cases you will get
a better fill. Over time, your fills should average out.
Q. How do I use the list of top 100 stocks ranked in order of attractiveness
based on relative strength?
A. You may use the list of 100 most attractive stocks to pick and choose
and build your own personal portfolio. One strategy is to buy stocks
that appear close to the top of that list. Hold a stock as long as
it in the list of 100. When a stock drops out of the list, sell it
and then buy again from the top of the list. This is just one way of
using the list. You may prefer to use it differently and tailor it
to suit your personal taste.
Another way to use the list is to buy any stock that makes it to the top 20.
To make room in your portfolio, you may have to sell some stocks. We recommend
you sell the lowest ranked stocks and buy the top ranked ones. This way you will
be rotating out of weaker stocks into stronger ones.
Q. How do you select stocks?
A. Our stock selection process incorporates both fundamental and technical criteria.
Every week, we screen thousands of stocks looking for the handful that have the
potential for spectacular stock price increases. We are looking for emerging
companies poised for enormous growth or established ones that are about to make
major advances. We want companies whose products are in such demand that they
can't make them fast enough. Ones with entrepreneurial leadership that is taking
advantage of technological breakthroughs to create new, super-fast growing businesses.
And we want to find them before they're discovered by the financial media and
hordes of investors. So we can buy them ahead of the pack and take full advantage
of the run-up in their stocks. We set very strict risk/reward guidelines and
whittle the possibilities down to a handful of companies with superior balance
sheets and liquidity and little or no debt. Then we take this short list and
subject it to a rigorous proprietary system based on cutting-edge computerized
technical analysis. This system ranks the stocks according to their short-term
momentum and relative strength. We list the top 100 in every issue of the Hot
Stocks Digest.
Q. Are these stocks risky?
A. On an individual stock basis, these small-cap stocks are quite volatile and
most people would characterize them as being very risky. That is why you must
diversify over at least 15-20 stocks, preferably more. If you have 15 stocks
in your portfolio and if four of them lose 25% each, your total portfolio loss
is only 6.66%. Furthermore, its quite possible that some of the other stocks
in the portfolio will go up thereby making up for the small loss. That is
why
it is imperative that you diversify your holdings over a number a stocks.
Q. My stock is up 250%. Should I sell?
A. That depends on your sell strategy. We, however, believe in letting our profits
run while cutting our losses short.
Q. A certain stock is down 4 points. Are you still recommending it?
A. Yes. Recommendations on a stock can only change once a week. If a stock is
still in the top 100, then it is rated a buy. Otherwise it is a hold.
Q. As a new subscriber, should I get fully invested immediately or should I invest
gradually?
A. Either strategy is fine. The aggressive option is to go ahead and buy all
stocks in the model portfolio. This way you'll be fully invested instantly. Even
though some of these stocks may be up 50-100%, it doesn't mean that they cannot
go up another 100% or more from these levels.
The more conservative option is to buy only the new stock buys added each week
and leave the rest of your portfolio in cash. This way, it'll take you a few
weeks to get fully invested. Just make sure that you divide your portfolio in
the right proportion. For example, if you have $100,000 to invest and you buy
1 new stocks this week, then you will buy $5000 worth of the stock and leave
the rest of the $95,000 in cash.
Q. Why are you recommending or buying XYZ stock?
A. The answer to a question like this is always the same -- "because our
computer models rank it as an excellent buy at this time".
Q. The 5, 10, 20 and 40 day % change in the list of top 100 stocks is projected
or actual?
A. That is the actual % change for each stock in the last 5, 10, 20 and 40 trading
days.
Q. I expect the market to have a correction. Should I sell my stocks?
A. When our proven asset-allocation models signal a change, we'll alert you
to gradually start selling your stocks.
Q. Can I call you with questions?
A. We are not in a position to give personalized investment advice. Everything
you need to know is contained in the newsletter. The purpose of the newsletter
is show the best of the best hot stocks in America today. The newsletter subscription
price does not include telephone consultation. We would like to spend our time
researching new investment opportunities rather than answering questions that
pertain to just one individual. You should consult a financial planner for your
specific needs. However, if you have a question of a general nature that other
people may also be interested in, please e-mail it to us at support@123wealthquest.comand we will try to answer it right away.
Disclaimer: Neither
the Hot Stocks Digest nor Wealthquest
International Inc., or any of its owners,
officers, employees or associates (who
may or may not hold positions in the
securities mentioned herein) will be
liable for losses, including losses of
profit or any consequential damages resulting
from the use of or the inability to use
this service. The Hot Stocks Digest is
intended for experienced, sophisticated
investors who are thoroughly familiar
with all the risks, costs, mechanics,
tax, and legal consequences of investing.
All subscribers or users of the Hot Stocks
Digest agree to take full responsibility
for their investment decisions and any
losses. Investments are at your own risk.
Profits are not guaranteed and losses
are possible. Past performance does not
guarantee future results.
How to make
sure you get our e-mail.
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