I recently came across an article on Mark Crisp’s system by which he purportedly made $6 million.
His method is to find a stock that you believe will increase its price by 10x over the next few years.
- Look for killer products, e.g. Crocs., try out the products yourself
- Check that the company have new products that it can ramp out in the future.
- Estimate the growth rate of earnings from this year to the next, based on historical trend and latest results.
- Calculate the forward P/E ratio (using the estimated earnings growth rate to get the expected EPS) to see that it is reasonable.
- Assume a PEG of 0.5, get the future P/E ratio, multiply that with the expected EPS to get the future stock price.
- The future expected stock price should be many times today’s stock price.
- Use a slow stochastic, 14 days, with 3 day moving average.
- Wait for a pullback of 20-30%, then wait to see the slow stochastic show < 20% and move upwards before you make the purchase.
- Method of buying
- Put all your capital into the company, don’t diversify.
- After the price doubles, max up by buying more on margin.
- After the price doubles again, max up with more margin again.
This looks like a high-risk strategy with no stop-loss. If you survive, yes, you can make a lot of money. If you don’t survive, well…