I believe this is the only way to make big money from the stock market
March 2009 - that was the first time I ever bought a share…
It was Old Mutual. And while Old Mutual was a massive company, the 2008 financial crisis decimated it, and the share became a ‘penny stock'.
I bought my first shares in the company for 603c, with the money I made from vacation work as a student at the mine I had a bursary with. I bought 990 shares with around R6,000.
By November that year Old Mutual hit R14.60.
I sold my shares - pocketing what seemed a small fortune at the time - R14,400 and odd change after brokerage.
That was my first triple digit gain, 142% in 9 months.
And suddenly - I had enough capital to invest in three separate shares.
That was the start of my working day and night on a new investment strategy.
I would invest in three to five shares at a time. None of them were blue chips - or the so called “Safe” shares on the JSE… But all of them had the potential for 30%, 50% or 100% gains within a year or two.
All of them would beat the ‘market average' that so many advisors tell you to settle for.
But I would not settle…
What do all these Double Your Money shares have in common?
On average you could’ve made 154% gains in less than 2 years on 14 shares.
If you were content with the JSE average – you’d have made a comfortable 13.32%, a year. Not bad. But certainly not life changing…
So, if you look at this list of shares that have made triple digit gains in lighting quick times, what sets them apart?
Three things that these 100%+ shares have in common
The small-cap effect: Not a single one of these shares are a JSE Top 40 share. In fact, they’re not even mid-cap shares. They are ‘small caps’ or penny shares. They have market values of less than R10 billion. In fact, at the time of tipping them, the majority of these companies were worth less than R1 billion. But they are proven to outperform…
You see, Eugene Fama, one of 2013's Nobel Prize economics winners, and his colleague Ken French, both of the University of Chicago, analyzed the "small-cap" effect in their famous 1992 paper, "The Cross-Section of Expected Stock Returns," covering the period between 1963-1990.
Small-cap stocks were riskier than their large-cap counterparts. But as Modern Portfolio Theory suggests, that higher risk was compensated for by higher returns.
They ticked all the boxes for my proprietary share selection system
Over the years I’ve perfected a number of indicators I look for that predicts winning shares with high accuracy. All of these companies ticked the boxes of my four tier system.
I call it the PowA! Penny Share screening system, and I look at four main criteria – which includes the profitability of the businesses, the strategy and track record of management, assets and the efficient use of them as well as what I call the ‘Wow factor’. And when all the factors work together perfectly for a share – you get the results I’ve shown above…
The big gains happened in the tick of an eye – you need nerves of steel
While it’s possible to predict the shares that will make big gains, with high accuracy it’s nearly impossible to predict exactly when that will happen. What I’ve found is that these shares tick along nicely up until one day…
That’s typically when the mainstream realises their potential.
And then the share prices POP!
If you’re not in before then – you’ll miss out on the ride. But to get in early means holding on to these shares for a nerve wracking but lucrative ride.
Here’s to unleashing real value
Note: 5 of 2 votes