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In pursuit of the elusive ‘sure thing’ investment

August 8, 2022

Whenever in my life I have found a sure thing investment it has nearly always turned out to be no such thing. The two nearest which were the real deal were when Rolf Schild of Huntleigh told me that research spending was going to go up 50pc that year while staying a constant percentage of sales and that profitability was going to improve. The implication, which I duly took was that profits were going to rise more than 50pc, which was not remotely in the stock market. Another one was when the late Anita Roddick of The Body Shop was driving me to the station in her car and told me ‘whatever profits you think we are going to make, we are going to make more’. They eventually made over £1m against a prospectus forecast of £380,000.

Those things used to happen back in the day but can’t anymore because as soon as companies become aware of price sensitive information they have to announce it. This makes it harder to find a sure thing investment based on having information that few other people have. Is there another way? I have been thinking about this and I have an idea, based on my indicators.

In a nutshell what I am suggesting is only acting when EVERY indicator is flashing green. This means all my indicators are bullish for my benchmark indices, my benchmark ETFs, the mega caps, and at least. 50pc of the rest. Once those conditions are fulfilled we will know we are in a bull market and should be able to invest with confidence for a good period to come.

Inevitably some of the rise will have passed, especially for individual shares but there should still be plenty to go for and now we will be investing against the background of rising Coppock indicators and in a market where investors are spoilt for choice – the perfect market. The wild card here is how quickly Coppock changes direction. My guess is that it will do a good job.

What is exciting is how perfectly conditions are falling into place for a new bull market to begin. All my indicators have been in free fall for practically all the stocks I follow for months. Coppock indicators are becoming negative all over the place which is the ideal precursor for new and powerful buy signals.

Hubspot illustrates what is happening. All the indicators are pointing firmly down and there is no sign of a change in direction by Coppock. I have just been reading Hubspot’s earnings report for Q1 2022, issued on 6 May 2022. It is as full of exciting growth, gung-ho plans and excitement as ever. The only thing which has changed is the share price which is down 70.2pc in nine months.

There is a massive clear out of loose holders/ momentum investors taking place in this stock and many others. Eventually we will reach a point when everybody who is thinking of selling will have sold and the shares will be ripe to resume a bull trend. Coppock has given good signals in the past and has just moved into negative territory so the next buy signal should be valid and important. Until then we sit tight.

Strategy

I am always conditioned by the fact that I deal tax free on leverage by using spread bets. This means that a sure thing investment is the Holy Grail for me but I guess it could work well for you guys too. The above argument is not cast in stone but just to give you an idea of how my mind is working. It all comes back to ‘don’t shoot until you see the whites of their eyes’. My gun is loaded and I am waiting. If and when markets get exciting I will swap it for a machine gun.

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