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How to Make Big Profits in the Market... Just Ask Rahul Shah - Private Briefing

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How to Make Big Profits in the Market... Just Ask Rahul Shah
Aug 24, 2018

A few days ago, Rahul Shah sent a very interesting mail to the research team.

It was about the open positions in his stock recommendation service: Profit Velocity.

You may be aware, dear reader, Profit Velocity is based on 'momentum investing' that seeks strong returns over a period of 2 to 3 years.

In his mail Rahul said he believes, the momentum strategy automatically gives an investor the advantage of investing into high growth stocks.

And that too without paying any attention to valuations and the quality of this growth.

Sound strange to you?

Well, not to Rahul Shah! We've grown used to such deep analysis from him.

He believes, when it comes to market momentum, quality and valuations don't seem to matter in the short-term.

Besides, even if you pay attention to these factors, there's no guarantee you will be proved right. Also, how can anyone know if the high growth will continue in the future.

Rahul's conclusion?

Betting with the crowd can be as lucrative as betting against it, as long as a few inevitable mistakes along the way don't destroy your corpus.

Now, this strategy won't appeal to a traditional value investor. But if you're willing to accept a bit of trading risk, here's what Rahul has to say...

  • With quarterly results out for most of the companies, we went on to see what numbers did Profit Velocity stocks report in their June quarter results. The study throwed up something interesting.

    12 of the 20 stocks in our open positions witnessed the biggest growth in profits for the June 2018 quarter. In other words, 60% of the Profit Velocity stocks are amongst the fastest growing companies in India.

    Looks like momentum strategy automatically gives an investor the advantage of investing into high growth stocks. Come to think of it, growth investing is in a way related to momentum investing.

    Isn't this the best of both worlds? Momentum investing, as the term suggests, is all about quick returns. And if these momentum stocks also happen to be the ones with the fastest growth in profits, its icing on the cake.

    I totally agree that not all of them would end up making money for investors. In fact, no strategy does. But even if a few of them do, the gains from them will be so significant and they will come so quick, they will more than compensate for the losers.

    Which is why we cannot emphasize enough how important it is to buy these stocks in a group and not take individual stock calls. In other words, follow the system to the tee and let the system take care of the rest.
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