Stock Sprinter Strategy Overview

The Stock Sprinter strategy is designed to build long-term wealth through the aquistion of appreciating and dividend-paying equities. The goal of the strategy is to outperform the market, or more specifically the S&P 500 (a benchmark which represents the largest 500 companies in the US). By consistently outperforming the market, the investor can make significantly higher returns over a long period of time.

Sprint Stocks

Every stock is assigned a sprint score. Stocks with high sprint scores give indications of potential for breakout performance. The stocks with the best scores can be found easily by sorting that column (click on header). The score is a proprietary combination of key measures that have been proven to identify high performing stocks. It is important to hold a number of these stocks since some of them will underperform others. Adequate diversification is done by holding approximately 10 of these stocks. As an example, an initial investment could aquire the top 10 on the list. The decision to sell would be when the stock is no longer in the top 2%-3% of the entire stock population. This is easily identified in the stock list by the green coloring (when stock is no longer green, it should be sold). This means we do not sell the stock just because it is not in the top 10 - it is sold when it falls outside the top range identified by the coloring. An average hold time for these stocks is about 6 weeks, but will vary between 2 weeks and 2 months.

Marathon Stocks

Marathon stocks represent large, stable companies that pay solid dividends. These stocks are held to provide additional stabilty to the portfolio. Typical dividends are in the 4%-6% range. It is assumed that these dividends are reinvested as they accumulate, based on the portfolio diversifcation model. While these stocks will not have the appreciation performance of a top sprint stock, they will accumulate a healthy return in dividends, and will provide some level of protection from market downturns. It is recommended to hold the top 5 of these (identified by the blue coloring of the cells after sorting). If a stock falls out of the top 5, it should be replaced by a new top 5 stock. Typical hold times for these stocks will be 4-8 months, and some will be held for even longer.

Rest (cash)

While we generally do not advocate market timing as a primary strategy, there is a reaonsable approach that is able to take advantage of market cycles, which are an inevitable part of stock investing. During undersold market conditions, the strategy will be nearly 100% in the market. But when market oversold conditions exist, maintaining a cash balance will allow cashing in of gains, a measure of protection against a downturn, and finally will provide opportunity to invest at a lower cost when the market goes through the next down cycle. See the next section for details.

Market Profile / Investment Profile

The Market Profile is an indication of oversold (>50) or undersold status (<50). It is based on long-term price to earnings ratios ranges, and helps give us a non-emotional measure of the state of the market. This is use to help us determine the proper ratios of investment, displayed in the Investment Profile indicator. Suggested ratios of sprint, marathon, and cash are based upon the Market Profile. In times of market oversold conditions, a higher proportion of marathon and cash holdings will be suggested. In times of market undersold conditions, sprint stocks will be a much higher proportion of the the portfolio.

How often do I need to evaluate and make trades?

The measures we use do not change dramtically from day to day, so this is not a day trading strategy. We recommend that an assessment be made every 3-4 weeks to evaluate trading opportunities. It is likely that approximately 8-12 trading transactions will occur per month. Because of this, we highly recommend a low-cost broker be used so that trading costs are kept to a minimum. There are several platforms emerging that offer trades at or below $5 per transaction.

If I follow this method, am I guranteed to a high return?

While the methods described here have historically returned gains greater than the overall market, stock market investing always carries risk. There are downturns in the market that affect nearly every stock, so during those times, returns on investment will be negiative. That is why stock market investing is a long term vehicle. But over the long term, the stock market has provided some of the best returns in the wide range of passive investments available. An an invester, you should always evaluate your decisions carefully, and be aware that investment in the stock market carries risk.