Your Guide To Hitting It Big In The Stock Market

The Poised To Triple Methodology Your Guide To Hitting It Big In The Stock Market Prepared By/ PTT Research Author/ Mark Gomes

introduction THE MULTI-MILLIONAIRE METHODOLOGY After semi-retiring from a successful institutional consulting career in 2008, I started donating time to write for Seeking Alpha (in early 2009). For four years, I dedicated myself to helping people make money. It was my way of giving back to a world that has blessed me with so much. The results have been nothing short of extraordinary. Over a four year span, most of my picks tripled in value. Many of the rest doubled or were acquired before getting the chance to triple. The average stock in my Core Portfolio rose by well over 100%. I was most proud of being publicly recognized for being the first analyst to provide proof that Himax (HIMX) would be the display engine behind Google Glass. The stock tripled in six months and went on to be named the #1 tech stock of 2013 on CNBC. My readers made millions. As a result, my following grew to exceed over 5,000 readers on Seeking Alpha and over 25,000 followers on Facebook. It sounds like a lot of fun, but helping people to get rich (or richer) is easier said than done. My skills required six years of formal education, over twenty years of experience, and two multi-millionaire mentors (one of whom was taught by the famous billionaire investor Jim Rogers). I quickly realized that my readers would need something that could help them learn my secrets in minutes, not years — a methodology. A methodology details the process by which something is done. Based my personal experience, if you’re not making money on our picks, we’ve probably done a poor job of explaining how. So take a few minutes to read this ebook. It will give you the ground rules I use in my investing. More importantly, it will arm you with the secrets I have used to make millions in the stock market.

web: pttresearch.com / blog: poisedtotriple.com / twitter: @poisedtotriple

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methodology GETTING STARTED First things first. Before you act on anyone’s stock analysis or advice, you should know as much as possible about that person. The Internet has made it easy for anyone to sway public perception regarding any topic, including the value of stocks. Many of them only want to do one thing – rip you off. I’m not ashamed to admit — in my early 20’s, I actually fell victim to a rip-off newsletter. The profit they promised was too good to resist. As it turned out, the editors weren’t Wall Street professionals. They were crooks…and I was just a patsy in a pump-n-dump pyramid. So beware of “analysts” who tout penny stocks. Most of them don’t have the credentials to pick stocks. As a result, their picks are pure gambles As for me, I started learning how to evaluate stocks in the mid-80s, a few years before the crash of ’87. In 1988, I earned a Track & Field scholarship to attend Northeastern University. It was the only way I’d be able to afford such a school, so I took full advantage of it. I studied Finance and spent as much time in the library as I did in class. I wanted to become the best stock-picker possible. By the time I gradated from college, I thought I knew a lot. In reality, it took another 10 years of training and real-world experience before I really started to know what I was doing. Looking at the stuff I see on the Internet and written in newsletters, I can tell you one thing for sure — most of the what you read is just as likely to hurt you as help. It’s very clear that most “analysts” have no idea what they are doing. They cite P/E ratios and regurgitate press clippings with no real analysis. This is because most “analysts” don’t have the necessary training. This is why you should always do a background check. Many aspects of my background are posted on PoisedToTriple.com and SeekingAlpha.com. But don’t stop there. Google me. Learn more about who I am before listening to a word I say. Your fortune is on the line.


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“be careful about chasing a stock up or placing market orders. Set a reasonable limit and stick with it. If the stock runs away from you, don’t worry — there will be more picks and opportunities in the future.”


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methodology RISK & REWARD First of all, I find that it is best to buy my picks when I first pick them, being mindful about my Risk/Reward philosophy. In other words, be careful about chasing a stock up or placing market orders. Set a reasonable limit and stick with it. If the stock runs away from you, don’t worry — there will be more picks and opportunities in the future. I’ve been doing this for 20+ years and the world never runs out of picks. Similarly, jumping in months later or after a pick has graduated can create confusion and uncertainty, which often sends readers running to me for help or guidance. Similarly, selling one of my picks to buy another could be asking for trouble. This Methodology does not advise doing that unless the pick you are selling has graduated. In fact, I developed this Methodology over the course of many years because I cannot provide individual guidance cheaply. At last count, I have 16,000 total followers. If I answered just ONE question from each person per year, it would be a full time job with no weekends or days off (literally — I did the math!). Thus, if you are not an experienced or sophisticated investor,

my advice is to read and reread this Methodology until you know and understand it completely. My article 12 Easy Moves To Double Your Money In 12 Months showed how even a child could have doubled their money in 2013. All it required was following our picks and utilizing this Methodology. Next, my picks are very close to being a simple matter of buy-andhold, but not quite. You have to do at least a little work yourself. For example, you can see my ongoing comments on any covered company by tracking my Comments and/or Instablog. Those sections allow you to click on the ticker symbol(s) you care about and see my commentary regarding those stocks. I also invite you to read my articles titled Why Aren’t I Making Money Yet? and How To Draw a Risk/Reward Chart. Both are critical aspects of how I pick and trade stocks. Risk/Reward charts are an integral part of my investing strategy. Risk/Reward charts make it easy to see when a stock is relatively cheap (or expensive). This helps to decide when to buy (or sell)… and how much. As my picks ascend within their Risk/Reward channels, I will generally look to trim my position. Conversely, if one of my picks moves to

the lower end of its channel, you can bet that I will strongly consider adding to my position! If you aren’t committed to a buy and hold strategy, it’s your responsibility to read my tutorials on drawing and utilizing Risk/Reward charts. Most of what I have said so far brings up another important lesson — chasing a stock up can be very risky. A weekly move of just 1.1% will triple your money in 2 years. Since 1996, I have tripled my money roughly every three years and that has worked out very well for me. Accordingly, this is my initial/default timeframe when calculating my charts and planning my investments (and adjust accordingly as the situation warrants). My latest Risk/Reward charts and updates are available to subscribers of my PTT Elite service ($15,000 annual subscription fee) on request. Please contact us to sign up. FYI, I occasionally share my latest Risk/Reward charts with the public. More often, I share them with PTT Insider Newsletter subscribers. No matter what, our premium service (i.e. the PTT Research Newsletter) subscribers almost always get delivery priority, if not exclusivity.


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Methodology Subscribers to our free PTT Insider almost always get our research before we release it to the general public, but Newsletter subscribers will generally receive the information long before any free members or the public. This lead time is often six weeks or more. In some cases, we won’t even release the information to the Insiders or the public. Based on this strategy, our free members get a lot of value…but our paying subscribers get much more. Our free services allow new investors to make enough money to justify paying for our premium services. This often takes their investing profits to a whole new level. Everyone wins! FYI, we highly recommend that our Newsletter subscribers continue to subscribe to the PTT Insider (and Follow me on Seeking Alpha), so they can stay abreast of what we’re telling those subscribers and the general public (so be sure to sign up!).

An annual subscription to the PTT Research Newsletter costs less than $4 per day. The average expense at Starbucks is nearly double that, but they don’t offer picks to triple your money! Keep that in mind – just $4 per day. Just one triple can pay for a Lifetime subscription many times over!

have one or two analysts covering them. I hope we can all agree that two people’s expectations should never be given “God” status. Similarly, how a stock reacts to earnings is often not a good indication of whether the company made good progress during the quarter. Most people don’t listen to the earnings calls, so their trading reaction in uninformed…and therefore invalid (and often wrong). In fact, I make a lot of money by taking advantage of overreactions and wrong reactions. This is how professionals invest (and beat the average investor). Make no mistake, when something major happens, I will look to provide my analysis on a best-efforts basis. That being said, if you don’t hear from me, the proper interpretation is that nothing major has occurred (and therefore, my opinion remains unchanged). As you read more and more of my reports, you will learn what to look for. When you see it, you’ll be better armed to act, even before I provide my analysis. This is an important part of becoming a successful selfinvestor. Honing this skill can give you a critical advantage terms of reacting to news and events before everyone else does!

Another thing you should do is monitor the news and SEC filings made by the companies whose stock you own. Understand this — in most cases, I do not make earnings predictions. Almost every winning team takes losses on the way to a championship. Guessing when those losses will occur is a losing strategy. Further, earnings estimates are often a poor (and incomplete) way of judging a quarter. Many of my picks only


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“In my personal portfolio, my aim is to hold 10 or 20 “core” (non-speculative) stocks, representing a total of 90% of my portfolio. ” I

“I also like to hold 10 or 20 speculative stocks, totaling 10% of my portfolio. This provides good diversification, allowing me to benefit from the winners, while being protected from the occasional, but unavoidable losers.” web: pttresearch.com / blog: poisedtotriple.com / twitter: @poisedtotriple

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methodology WHAT KIND OF STOCKS DO WE PICK? By design, our picks often focus on unknown, unloved, or even hated stocks. After a careful screening process, we only choose stocks that we believe will reward investors for navigating its three major investment cycles, which we define as 1) Great Find, 2) Wait Time, and 3) Gold Mine. These are our official ratings. You want to be long during the Great Find and Gold Mine stage, but much more cautious during Wait Time. I highly recommend reading more about this here. It’s critical to maximizing your returns. For your convenience, we also classify some of our picks as “speculative”. This means that the company has not yet fully-established itself. The success of the pick is generally dependent on the company fulfilling certain expectations. CNBC’s Jim Cramer (a former client of mine, from his days at Cramer & Co. and Cramer Berkowitz) is an advocate of allocating 10% of one’s portfolio to speculative picks. This is absolutely crucial to understand. In my personal portfolio, my aim is to hold 10 or 20 “core” (non-speculative) stocks, representing a total of 90% of my portfolio. Following my advice above, I also like to hold 10 or 20 speculative stocks, totaling 10% of my portfolio. This provides good diversification, allowing me to benefit from the winners, while being protected from the occasional, but unavoidable losers. Some of our picks will be called “Ten Baggers Or Bust”. Be sure to pay respect to the possibility that these picks can go “bust”. If they do, the loss can be 100%. By limiting one’s speculative holdings to 10% of one’s total portfolio, such catastrophic losses should be more than covered by the winners. As a rule of thumb, 10% allocation implies that one’s investment in a speculative stock should be 10% (1/10th) of what one would put into a non-speculative one. Another thing to remember is even though the series is entitled “Poised to Triple” we do not expect every pick to triple. That would be foolish. More accurately, we pick stocks that we believe are poised (in other words, “have the potential”) to triple. As our historical performance shows, many do! Many more double or get acquired. Of course, some simply don’t work out (you can see my work on SeekingAlpha for examples). Dating back to the 1990s, my winners have completely overwhelmed the losers, leading to nearly two decades of outstanding gains for my clients and subscribers. This is the key to our portfolio, which takes calculated risks on companies based on their odds of success and failure (a.k.a. risk and reward). Specifically, I seek the rare combination of relatively low risk and very high potential reward. I do this by sticking to my knitting and employing a virtual army of industry experts who understand the ins and outs of the companies I consider. All told, I spend 6-figures on research annually…so my subscribers don’t have to.


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Methodology RECOMMENDATIONS

1. 2.

Keep up with our articles, instablogs, and comments for updates on our picks. We provide free real-time alerts on Twitter and Facebook every time we post something important.

Beware of the losers. I try to identify and shed my losers before they implode. When we pick a stock, it is generally at a price that we believe is near the floor of where it should go. A significant decline from those levels is usually a sign that we’ve made a bad pick. Because of this, if one of our picks drops 20% from its initial price, I revisit my thesis, take a hard look in the mirror, and decide if I’ve made a mistake or if it’s worth holding on.

If not, I will let you know as soon as possible. Generally, the loss will be limited to 20%, but could exceed that under certain circumstances. Luckily, my winners tend to double, triple, or get acquired, which more than makes up for the occasional 20% loss.

Our Speculative picks tend to be the exceptions. Speculative picks can easily fall 20% or more before taking off. In fact, my biggest winner ever dropped 25% over a nine month period before going from $3 to $30. Because of this, it’s best to keep a special eye on the fundamental progress of your speculative picks, rather than their stock price. As long as management keeps making progress, things should turn out ok. If they encounter stumble after stumble and provide excuse after excuse, it’s likely a signal to cut your losses and move on. Our updates will assist.

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Keep an eye on each stock’s potential risk and reward. If you buy a stock at 10 that could go down to 5 or up to 30, you are taking on $5 of risk in pursuit of $20 of reward. All else being equal, situations like this make great investments. However, too many investors lose sight of this equation as it changes. For example, if the same stock quickly jumps to $25, your risk may now be $20, while your potential reward is only $5.

This is why our picks usually “graduate” from our portfolios once they triple. After tripling, only the rare stock triples again as easily. When we see an exception to that rule, we’re sure to let our subscribers know.


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methodology For shorter-term trades on longer-term investments, we utilize risk/reward charts like the ones you see below:


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methodology If you’re a day trader or a technical analyst, you probably have tools that are far more sophisticated than this (FYI, I was a technical / quant analyst from the mid-80s until the mid-90s). As a longconverted fundamental analyst, we simply attempt to find the longer-term path the stock is likely taking (depicted by the two long parallel lines). It’s important that the slope of those lines is sustainable (in the case of AMZN, the lines are moving up at a rate of 19% per year, which feels quite sustainable). If the lines are too steep, you are likely drawing a short-term trend (depicted by the short parallel lines in bold). Unsustainable trends generally end in a reversal, as it did in this case. By following these tips, you can find better entry and exit points. FYI, many of our picks will entail bottom-fishing small-cap value stocks. Performance-wise, this equity asset class has dominated all others for 6 decades running. It is also the class with the least amount of institutional competition. Thus, you’re not dealing with companies that are being extensively researched by 500 MBAs. You want to avoid this sort of competition if you can help it. Trust me. Every week, Pipeline Data invests thousands of dollars into research so we can help buy-side institutions predict the quarterly performance of larger companies like ORCL. Unless you’re an industry expert, you don’t want to compete with that level of research, experience. Focusing on smaller companies gives smaller investors a distinct advantage. Such an advantage is rare in today’s market environment. This is where the likes of Warren Buffet cut their teeth. In fact, Warren Buffet once said that he would never have abandoned this asset class if he hadn’t become so rich. Once you have billions like him, investing in such small companies becomes virtually impossible (his typical position often represents several-times the entire market cap of my picks!). I hope this helps to illustrate the point. Kindest Regards & Best Wishes,


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About the author mark gomes, CEO PTT Capital

EXPERIENCE Mark Gomes has over twenty years of experience as an information technology (IT) stock analysts. His utilization of IT purchasing data has been a hallmark of his investment methodology. As a program director at International Data Corporation, he advised hundreds of Wall Street clients on the evolution of the consumer PC market in the mid-90s. His program serviced top analysts from the industry’s biggest firms, including Goldman Sachs and Morgan Stanley.

In 1998, Mr. Gomes established the Investment Research Program (IRP) at AMR Research (later acquired by Gartner Group). His coverage of the Internet Boom turned IRP into a multi-million dollar profit center. In late 1999, he predicted that the Internet Bubble would crash in Q1 of 2000 by identifying weaknesses in the IT purchasing pipeline. He later called the bottom of the bust in late 2002. In July 2004, Gomes founded Pipeline Data, LLC. One month later, he initiated coverage on Apple Computer (AAPL) at $15.87 in an emphatic alert to Pipeline Data’s institutional customers. His analysis presaged Apple’s reemergence and propelled Pipeline Data’s

success, attracting a who’s who of mutual fund and hedge fund giants. In 2009, Gomes became a contributor to Seeking Alpha where he has amassed an enviable record for identifying buyout candidates and stocks that are “Poised To Triple”. Mark co-founded PTT Capital in 2013 and was most recently credited with assembling evidence that identified Himax (HIMX) as the technologies behind Google Glass, one of the world’s most eagerly awaited new products. After the release of his findings on SeekingAlpha, shares of HIMX doubled in a 6-week period.


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PTT Capital, PoisedToTriple.com, and PTTResearch.com disclaim all warranties for the Materials, either express or implied, statutory or otherwise including, without limitation, warranties of merchantability and fitness for a particular purpose. All Materials provided by PTT Capital, PoisedToTriple.com, and PTTResearch.com are provided for informational purposes only. Under no circumstances shall the Materials be considered as advice relating to any investment decision or as an offer to purchase or sell any security, or as a solicitation or recommendation for the purchase, sale or offer to purchase or sell any security. Without limiting the foregoing, PTT Capital, PoisedToTriple.com, and PTTResearch. com (i) does not make any guarantee that the information presented in the Materials is accurate, complete, timely or contains correct sequencing of information; (ii) does not make any warranties with regard to the results obtained from its use or that the Materials will meet any requirements; (iii) makes no warranty that access to the Materials will be uninterrupted, timely, secure or error-free and (iv) shall not incur any liabilities for claims, losses or damages arising from any inaccuracy, error, delay or omission in the Materials, the use of the Materials or any actions taken or not taken in reliance on the information presented in the Materials. Without limiting the foregoing, in no event shall PTT Capital, PoisedToTriple.com, and PTTResearch.com be liable for any consequential, special, incidental, indirect or punitive damages, including but not limited to loss of profits whether in contract, tort or otherwise.

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