This chart illustrates why investing in US stocks is such a good strategy. The performance of the Nasdaq 100 since launch in January 1985 is one of the financial wonders of the world. Who would not want an investment that compounds (increases) in value by 15pc a year even before allowing for the effect of reinvested dividends. It is a sensational performance and a tribute to the vigour of the US economy. Europe is a lovely museum. America is the workshop that pays the bills and creates the future.
There is a new kid on the block in China and they are starting to make an impact, which is why there are a growing number of Chinese-based Hong Kong or Nasdaq quoted companies joining the QV portfolio. Other regions are also flickering into life and Europe may eventually throw of its chains (disband the euro and lessen its obsession with regulation). The UK post-Brexit will change, hopefully in a good way.
The world is heading into a boom which will likely give interest rates a tendency to move higher and lead to inflationary fears. My hunch is that inflation is not going to be a problem in a technologically advanced world and that interest rates will remain very low by historic standards but that is just my guess. I am certainly a bull of stocks given all the exciting things happening in the corporate world.
A strategy based on stock selection and follow-up buy signals
More experienced subscribers will know that Quentinvest for Shares is a work in progress. I liken my investment strategy to a piece of software which is constantly being improved and upgraded. In this issue I believe we are making a massive leap forward.
The core of the strategy is stock selection. I only choose one kind of share – 3G (great growth, great story, great chart). I measure these things pragmatically with my main criterion that the characteristic should be obvious. Great growth is straightforward although it may be based on one of many metrics and I may even (think C3:AI) accept slower growth if the story is really exciting. Great chart is also mostly obvious. A great chart is a rising chart. Within that I will accept massive volatility because that is what we are seeing in 21st century stock markets.
I could almost have a five minute rule. If it takes more than five minutes to determine that a stock is great growth and has a great chart they probably don’t fit the bill. The one that takes longer and is the fun bit is great story. For all the stocks in the QV portfolio I have studied them, some more than others but that is an ongoing process and found that they have great stories.
The bottom line is that the QV portfolio, which now contains some 250 stocks (I haven’t actually counted them) is a very special list. It is a list of many of the most exciting quoted stocks in the world. Many of them are businesses which are creating the modern world. There is an excellent case for holding almost all of them. Some have obviously ceased to be 3G (again this will usually be obvious) and should not be bought.
Once selected there is the question of what to do with them. I have broadly three strategies. One is simple buy and hold. I find the stock, alert it in QV and we all buy a stake big enough to be meaningful but leaving us with the firepower to keep building the portfolio. The aim is to build a significant portfolio of say 100 stocks.
Note that I do not target diversity in my investment strategy. If your portfolio is 100pc invested in North American technology stocks that is fine with me. What I do like is not to put all my eggs in one basket (one stock) because that is too stressful and most people, unless they founded the business, cannot cope. I certainly can’t and nearly always come to grief when I try to do this. There is no need anyhow because there is a huge choice of exciting 3G stocks out there.
The second strategy is all about turning stock market volatility to your advantage and reducing stress levels to the lowest possible level consistent with making decent returns. This involves buying all the stocks in your portfolio in small incremental parcels. It is £-cost averaging applied to every stock you buy. My particular variant on this approach, discussed further below, is to buy incremental parcels on new buy signals. I like to do this because it focuses your portfolio on winners and neglects losers. This gives you an extra bias to success and is ideal for cautious, patient investors or for people investing money they cannot afford to lose. The gains may be less but they will be more certain (and should still be very substantial over times).
The third strategy which is closer to what I do personally is to buy a meaningful chunk initially and then add smaller parcels on subsequent buy signals. I use leverage to do this so my ride in the stock market is exciting but also at times scary. It works for me but then I am good at handling stress and love the excitement. I also keep on finding stocks that I just have to own so I am like a greedy kid in a sweet shop with a non-stop sugar rush.
This is why I always advise my subscribers to do what I say, not what I do, at least with the bulk of their funds. I am trying hard to be more sensible with my own investments but it is like asking a Formula 1 racing driver to take his foot off the accelerator. I find it very hard to do.
Nearly 200 buy signals.
There are nearly 200 buy signals in the latest issue of Quentinvest, which I am sure many of you will think is ridiculous so I am trying to explain the thinking behind my selections. I am trying to make QV for Shares (and QV for ETFs) a complete investment system. The idea is to (a) choose great stocks) and (b) add to holdings on ALL subsequent buy signals.
I have various kinds of buy signals, all chart based. The first is based on chart breakouts. The publication, Chart Breakout, still available in hard copy format as well as on line, is now known as Great Charts by Quentinvest. However it is still the same publication. I focus on shares making what I consider to be chart breakouts. GC is published once a month and is intended to be a fertile source of buying ideas for subscribers.
The second type of buy signal is what I call programmatic. I look at moving averages and trend lines to find stocks that have been in a decline but now seem to be heading higher again. It is not rocket science but you have to do your home work and many of my subscribers obviously have other things to do like their job.
The third type of buy signal and my newest invention is what I call buying the green. I use candle stick charts and the way they work is that if the price ends higher over the period of the candle (daily, weekly, monthly whatever) the candle will be (in my case because you can choose) green. If the price ends lower the candle will be red.
This is the ultimate in simplicity because there will be an unequivocal signal every month. Buy or don’t buy. You can have a further refinement whereby you only buy when a green follows a red. So you don’t buy all the greens but only a green preceded by a red indicating a recovery from a decline in the stock.
My reading of the whole stock market, especially in North America, is that after a period of turbulence, with heavy profit-taking in many exciting stocks, that prices are again heading higher. The effect of applying all my types of buy signals to the QV for Shares portfolio is that we have nearly 200 buy signals. These are listed below in alphabetical order.
Most people will be like me. They do not have an inexhaustible stock of funds available for investment. After many ups and downs I am still building my 100-share portfolio so I use this list more to add new names to my portfolio. But I also use it to take holdings to the next level. I am trying really hard to be more sensible in my approach to doing this.
What I always want to remind you is that although the list is long and all I do is name the stock and the price these are not weak recommendations. They are all based on a very exclusive club which is the QV portfolio. If you are not 3G you have no chance of being in this list. It is like inviting guests to a tennis weekend and you only get invited if you are already playing Wimbledon.
If you took any of these stocks and did an in-depth study you would be impressed. They all have exciting stories – every single one of them. If you had the money to buy them all I would certainly say – go for it. All these stocks will be added to the table at the recommended price so I need them to go well to keep my performance figures high. I am confident that they will.
Remember, if you do study them before buying that I choose stocks for excitement, not for value. A focus on value leads inexorably to a portfolio full of shares in worthy but unexciting businesses and I am not interested in those for Quentinvest.
Some people describe me as an out-and-out growth stock investor and that is exactly what I am.
The list
Abbott Laboratories. ABT. Buy @ $115.50
Adobe. ADBE. Buy @ $588
American Micro Devices AMD Buy @ $87
Afterpay. APT. Buy @ A$120.47
Alibaba. BABA. Buy @ $227
Align Technology ALGN. Buy @ $621
Alphabet. GOOGL. Buy @ $2448
Alteryx. AYX. Buy @ $89
Amazon. AMZN. Buy @ $3443
Ambarella. AMBA. Buy @ $106
Anaplan. PLAN. Buy @ $55
Appian Corporation APPN. Buy @ $144.50
Apple AAPL Buy @ $134.50
Argenx SE ARGX. Buy @ Euro315
Ashtead. AHT. Buy @ 5386p
Arista Networks. ANET. Buy @ $362
ASML. ASML. Buy @ $704
Avalara. AVLR. Buy @ $165.
Avast. AVST. Buy @ 502p.
Axon Enterprise. AXON. Buy @ $172
Bandwidth. BAND. Buy @ $141
Beyond Meat BYND. Buy @ $155.5
BiliBili. BILI. Buy @ $126.50
Bill.com BILL. Buy @ $186.50
Blackline. BL. Buy @ $112.50
Bio-Techne Corp. TECH. $445
Booz Allen Hamilton. BAH. Buy @ $85.50
Bumble. BMBL. Buy @ $57
C3.AI. AI. Buy @ $66.40
Cable One. CABO. Buy @ $1897
Cadence Design Systems CDNS. Buy @ $137
Canada Goose. GOOS. Buy @ $42.3
Carvana. CVNA. Buy @ $305
Carl Zeiss Meditec. AFX. Buy @ Euro166
Charles River Laboratories. CRL. Buy @ $366
Chegg. CHGG Buy @ $84.50
Chewy. CHWY. Buy @ $83
Chipotle Mexican Grill CMG. Buy @ $1506
Cloudflare. NET. Buy @ $106
Cochlear. COH. Buy @ A$251
Corporate Travel Management. CTD. Buy @ A$20.84
Coupa Software. COUP. Buy @ $262
Croda International. CRDA. Buy @ 7308p
Crowdstrike Holdings. CRWD Buy @ $253
Datadog DDOG. Buy @ $106
Dexcom DXCM. Buy @ $427
Diageo. DGE. Buy @ 3505p
Digital Turbine. APPS. Buy @ $80
Docusign. DOCU. Buy @ $284
Domino’s Pizza Inc. DPZ. Buy @ $463
Domo Inc. DOMO. Buy @ $82.50
Dropbox. DBX. Buy @ $30.15
Dynatrace. DT. Buy @ $59.50
Edwards Lifesciences. EW. Buy @ $102.50
Enphase Energy. ENPH. Buy @ $188
Epam Systems. EPAM. Buy @ $521
Estee Lauder. EL. Buy @ $314
Etsy. ETSY. Buy @ $198
Everbridge. EVBG. Buy @ $139.50
Experian EXPN. Buy @ 2815p
Facebook. FB. Buy @ $355.50
Fastly. FSLY. Buy @ $61
Fevertree. Drinks FEVR. Buy @ 2642p
Fisher & Paykel Healthcare. FPH. Buy @ A$29.50
Five9. FIVN. Buy @ $184.50
Fortinet. FTNT. Buy @ $247
Futu Holdings. FUTU. Buy @ $178
Fiverr International FVRR. Buy @ $250
Gear4Music. G4M Buy @ 1020p
Genscript Bio. 1548. Buy @ HK$35.65
Getswift Technologies. GSW. Buy @ A$1.22
Globant. GLOB. Buy @ $288
Godaddy. GDDY. Buy @ $87.50
Halma. HLMA. Buy @ 2731p
HelloFresh. HFG. Buy @ Euro82
Hermes. International RMS. Buy @ Euro1227
Horizon Therapeutics. HZNP. Buy @ $95.50
Hubspot. HUBS. Buy @ $594
IDEXX Laboratories. IDXX. Buy @ $631
Impax Environmental Markets. IEM. Buy @ $477
In-Mode. INMD. Buy @ $96.46
Inogen. INGN. Buy @ $66
Inspire Medical Systems. Buy @ $196
Intertek. ITRK. Buy @ $5570p
Intuit. INTU. Buy @ $486
Intuitive Surgical Corp. ISRG. Buy @ $912
ITM Power ITM. Buy @ 489p
IShares World Momentum IWMO. Buy @ $63.14
Just Eat Takeaway. JET. Buy @ 6794p
Kering KER. Buy @ Euro755
Keyence Corp. 6861. Buy @ Yen56210
Learning Technologies Group LTG. Buy @ 192p
Lemonade. LMND. Buy @ $110.50
Lendingtree. TREE. Buy @ $220
Li Auto. LI. Buy @ $33.50
Lightspeed POS. LSPD Buy @ $106
Liontrust Asset Management. LIO. Buy @ 1848p
London Stock Exchange Group. LSEG. Buy @ 81.96
L’Oreal. OR. Buy @ Euro385.50
Lululemon Athletica. LULU. Buy @ $363
LVMH. LVMH. Buy @ Euro676
Lyft. LYFT. Buy @ $58.50
Masimo Corp. MASI. Buy @ $248
Mastercard. MA. Buy @ $367
Match Group. MTCH. Buy @ $161.50
Meituan. 3690. Buy @ HK$323.8
MercadoLibre. MELI. Buy @ $1570
Mettler-Toledo. MTD. Buy @ $1381
Microfocus International. MCRO. Buy @ 543p
Microsoft. MSFT. Buy @ $268.50
Middleby Corp. MIDD. Buy @ $171.50
Monday.com. MNDY. Buy @ $232
MongoDB. MDB. Buy @ $389
Monolithic Power Systems. MPWR. Buy @ $374
Morningstar. MORN. Buy @ $250
MSCI. MSCI. Buy @ $534
Nasdaq Inc. NDAQ. Buy @ $177
Natera. NTRA. Buy @ $116.50
Nio. NIO. Buy @ $53.44
Nikola Corp. NKLA. Buy @ $18.50
Nvidia. NVDA. Buy @$795
O’Shares Global Internet Giants. OGIG. Buy @ $57.50
Okta. OKTA. Buy @ $247
O’Reilly Automotive. ORLY. Buy @ $561
Palo Alto International. PANW. Buy @ $378
Par Technologies. PAR. Buy @ $70.40
Paycom Software. PAYC. Buy @ $373
Paypal Holdings. PYPL. Buy @ $293
Pegasystems. PEGA. Buy @ $140.50
Peloton Interactive. PTON. Buy @ $126.50
Pinterest. PINS. Buy @ $78.50
Polar Capital Technology Trust. PCT. Buy @ 2382p
Procore Technology PCOR. Buy @ $93
Pool Corporation. POOL. Buy @ $456
Prologis. PLD Buy @ $121.50
Invesco QQQ Trust. QQQ Buy @ $353
Rapid7. RPD. Buy @ $96.50
Repligen. RGEN. Buy @ $201
Rightmove. RMV. Buy @ 661p
Ringcentral. RNG. Buy @ $306
Roku. ROKU. Buy @ $440
S4 Capital SFOR. Buy @ 621p
S&P Global Inc. SPGI. Buy @ $410
Salesforce.com CRM. Buy @ $244
Sea Limited SE. Buy @ $281
Servicenow. NOW. Buy @ $552
ShakeShack. SHAK. Buy @ $105
Shift4Payments FOUR Buy @ $95.50
Shopify. SHOP. Buy @ $1492
Shotspotter. SSTI. Buy @ $48.50
Snap Inc. SNAP. Buy @ $66
SPDY S&P 500 ETF. SPY. Buy @ $427
SolarEdge Technologies SEDG. Buy @ $284.50
Spiral-Sarco Engineering. SPX. Buy @ 13810p
Splunk. SPLK. Buy @ $144
Spotify Technologies. SPOT. Buy @ $271.50
Springworks Therapeutics. SWTX. Buy @ $83
Square. SQ. Buy @ $247
Stryker.Corp SYK. Buy @ $260
Superdry. SDRY. Buy @ 427p
Synopsys. SNPS. Buy @ $276.5
Teledoc Health. TDOC Buy @ $169
Teleflex Corp TFX. Buy @ $407
Tesla. TSLA. Buy @ $677
The Joint Corp. JYNT. Buy @ $82.50
The Trade Desk. TTD. Buy @ $79
Turning Point Therapeutics. TPTX. Buy @ $76
Twilio. TWLO. Buy @ $398
Unilever. ULVR. Buy @ 4283p
UP Fintech Holding. TIGR. Buy @ $28
Veeva Systems. VEEV Buy @ $320
Verisk Analytics. VRSK. Buy @ $175
Victoria Carpets. VCP. Buy @ 1055p
Visa V Buy @ $235
Volex. VLX. Buy @ 387p
Vuzi. VUZI. Buy @ $18.60
Watches of Switzerland Group WOSG Buy @ 820p
Water Intelligence. WATR. Buy @ 840p
Wingstop WING. Buy @ $157
Wisdomtree Nasdaq 100 3x daily leveraged. QQQ3. Buy @ $177.14
Wix.com WIX Buy @ $297
Workday. WDAY Buy @ $242
Wuxi Bio. 2269 Buy @ HK$144
Xero XRO Buy @ A$138.09
Xilinx XLNX Buy @ $138
Yougov. YOU Buy @ 1185p
Yu Group YU. Buy @ 241p
Zalando ZAL Buy @ EUR102.50
Zebra Technologies ZBRA Buy @ $530
Zendesk. ZEN Buy @ $147.50
Zillow Z Buy @123
Zoom Info Technologies ZI. Buy @ $53.80
Zoom Video Communications. ZM Buy @ $387
Zscaler. ZS. Buy @ $219
When my daughter saw that in this issue of Quentinvest there were going to be nearly 200 alerts she groaned theatrically and I expect some of you may feel the same. However there is method in my madness. These are real buy alerts. It is just that there so many of them and because they are chart-based there is no commentary. My reasoning is that we need research and explanation when a stock goes into the QV for Shares portfolio but when it is a follow-up buy recommendation the name, code and price is all we need.
It could be nice to talk about latest developments and any ‘something news’ that might be going on to drive particular shares higher but this is not practical with so many stocks. I have a choice between alerting a handful of stocks giving buy signals and providing more commentary or alerting ALL the stocks giving buy signals and skipping the commentary which is not strictly necessary. Since the point of the alert is the buy signal the latter approach makes sense.
An interesting question is to think about the stocks which are not giving buy signals. As well as buying the green you could use the chart to signal selling the red. Since all the ‘buying the green’ stocks from the portfolio are listed above this means that all the stocks not listed are currently reds as in the latest candle stick on the chart is red. I don’t treat these as sell signals partly because in most cases these are very minor sell signals.
The overwhelming momentum in these stocks is upwards making even minor buy signals interesting. Sell signals are against the trend so likely to be reversed. Some sell signals are more important but even then most often the passage of time sees the uptrend resuming. So back to the core philosophy which means no sell signals. Quentinvesr is a one-way strategy – buy, hold, buy more.
In this approach a consistent failure to buy becomes a kind of sell signal because such stocks rapidly become less important to the portfolio. Also what may happen when a stock is very weak is that there will be a string of red candlesticks so when the green buy signal eventually comes it can be at very low levels so even underperforming stocks can eventually become profitable.
It is a matter of taste whether you buy stocks once or keep adding to your holdings as I do but if you do the latter these regular buy signals can be very useful. My idea, at the moment, is to do this mass alerting process each month. In stronger markets there will be many alerts as currently. In weak markets there will be fewer.
We should then have a complete investing system, which I believe will deliver excellent results.
