As a full time microcap investor, I haven’t found too many books that correlate with my own investment processes in finding the next microcap that can turn into a small-midcap. However, Jesse Stine’s book is about the closest one I’ve come across. I normally completely tune out books with titles like this one because it’s usually some self-described guru trying to sell their “trade like me” DVD series or subscription service. A recommendation from another MicroCapClub member prompted me to buy the book, and I’m glad I did. Jesse doesn’t invest exclusively in microcaps, but many of his big winners started out as microcaps.
In the book, Jesse goes into great detail about his trading-investing strategy that turned $46,000 into $6.8 million in 28 months from 2003 – 2006. The more I read the book the more I realized that someone finally put 90% of my own investing philosophy down on paper. I was immediately jealous and annoyed that Jesse beat me to it 🙂
A big part of Jesse’s philosophy is completely tuning out the media and financial publications as they are a distraction. He rightly points out that when you start to hear a trend or stock on CNBC it’s normally time to sell, not buy. It’s also important to not put too much emphasis on general market performance. The great stocks will move up in any macro market condition. I agree completely with these two points, as ZAGG has always been my example of a stock that went up 250% during the crash of 2008-09.
Jesse’s investment philosophy is very similar to my own so it was a very easy and enjoyable read. Jesse is very picky, and holds only a few companies that fit a strict set of criteria. Jesse isn’t a day trader as his normal position is for a few weeks to a year. His approach combines a strict set of technical and fundamental analysis. He uses technical analysis for his buy-sell points, but he mostly uses fundamental analysis to find his next “superstock”. I was very impressed with his list of “Fundamental Super Laws” for picking winners. He goes into detail about share structure, earnings growth, operating leverage, comps, backlog, insider buying, super trends, etc.
If you are a passionate investor like I am, you will be able to read this book in a night or two. I highly recommend reading this book. I found it very useful and you will too.
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How is this book different than Mark Minervini book
I’m not sure, I haven’t read Minervini’s book.