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EXPERT SPOTLIGHT
JIM BUSCH
Senior Managing Analyst
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Jim manages the fundamental and technical teams that publish Briefing.com’s
proprietary idea generation content, which is found primarily on
Briefing In Play Plus. He developed the quantitative
systems behind
Emerging Growth, Value Leaders, and Liquid
Momentum.
He is a regular contributor to Emerging Growth, Emerging Value, and The Next Big Thing, and posts commentary to our higher level services under the GrowthTrader (SETUPX)
custom ticker.
Jim joined Briefing.com in late 2001 after working for three years
at CCBN and Pioneer Group, and has degrees from The College of William
& Mary and the London School of Economics.
Get the inside scoop on Jim Busch. This expert spotlight features:
• Q&A
• Samples of Jim's Analysis
• Featured Videos |
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Q & A
Q:
You have been providing analysis and commentary for Briefing.com
for nearly 12 years now. What trends and themes are you seeing in
today’s market and economy?
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A:
It’s interesting, I’ve heard from many
market commentators and investors that the volatile market action
over the past 3+ years has forced them to shorten their time
frames. I’ve actually come to the opposite conclusion: there
is so much noise in the market these days resulting from the
constant geopolitical headline risk and from high-frequency
algorithmic trading, that this has forced me to extend my timeframe
so that I’m not shaken out of my positions so easily.
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Q: What
are some of the biggest mistakes you see investors make in today’s
markets and what advice can you give them?
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A:
The biggest mistake I have seen investors
make (and I have been guilty of this in the past as well) is
not having a well-thought out game plan.
For me personally, I found that there are two primary keys to
success when it comes to trading or investing:
1. Develop a strategy that fits your own personality, time-frame,
and tolerance for risk – and stick to it.
2. Practice good money management.
it’s incredibly difficult to make money in the market over the
long-term if you don’t have a strategy that defines your universe
and provides you with a game plan. Just keep in mind that different
strategies work for different personality types – some people
may be more comfortable with intraday technical trades, while
others may find longer-term fundamental strategies suit them
better.
Taking myself as an example, it took me probably 5+ years to
learn the style that best suited my personality type (I have
always had an affinity for growth stocks, and my preferred holding
period is measured in months, not hours or days). Over time
as I gained experience and incorporated both fundamental and
technical analysis into my investing toolkit, I developed a
strategy based on earnings growth and Relative Strength that
was well-suited to my temperament and investing style.
And this brings me to the second point above: once you’ve identified
your preferred strategy, practicing good money management skills
– defining your risk/reward ahead of time, and limiting your
losses – will allow you to survive the inevitable rough stretches
and down years, and stay in the game over the long-term. Personally,
I always define my risk/reward before I enter a new position,
and I always limit my potential loss in a given position to
2% of my total account equity.
(By the way, if you’d like to explore this topic further, there
is no better book on the subject than Alexander Elder’s Trading
for a Living.)
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Q: You are the creator of the Emerging
Growth system on Briefing In Play Plus. Explain how your quantitative screening and ranking system works.
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A:
The impetus for creating
the EG system came from looking at one too many charts of a
“new” growth stock that I had just discovered, and seeing that
it had already been on a year-long, triple-digit run. Invariably,
this would prompt the question, “Why didn’t I know about this
one earlier?” At the time, none of the existing growth stock
services on the market had what I was looking for, so I created
our own proprietary system from scratch during the Fall of 2008,
which went live for our Briefing In Play Plus subscribers in January 2009.
For those who aren’t familiar with it, Emerging Growth was designed
to uncover small, fast-growing companies that have the potential
to become market leaders. Our ranking system uses various fundamental
and technical criteria, but places particular emphasis on superior
6-month Relative Strength, strong quarterly earnings and sales
growth, recent margin expansion, and a clean balance sheet.
Our focus is squarely on the small- to mid-cap segment, which
tends to be under covered on the Street and provides a lot of
under-the-radar opportunities.
On the In Play Plus service, we publish the updated EG rankings
every Monday. This report contains the new Buy List, as well
as our own proprietary summaries of the catalysts that are driving
each stock. Throughout the week, our fundamental and technical
analysts publish company reports, intraday spot analysis, and
technical set-ups. It really is a comprehensive approach.
Check out a sample Emerging Growth report now.
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Q: You also created the Value Leaders report. What value does this provide to our clients and how
can they benefit from it?
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A:
Not every investor is comfortable with
the volatility inherent in the small- and mid-cap growth stocks
that make up the Emerging Growth list. In addition, it’s also
true that during a given market cycle there will be periods
where growth outperforms value, and value outperforms growth.
So launching a Value system seemed logical, but one aspect of
value investing that I have always found problematic is the
risk of getting caught in “value traps,” which are stocks that
have perpetually cheap valuations but nevertheless continue
to decline in price. After all, most value stocks are cheap
for a reason: they’re either turnaround stories, or deep cyclical
plays going through the wrong phase of the cycle, or just poorly-run
companies (sometimes all of the above). In my mind, a new Value
system would have to mitigate or eliminate the risk of getting
caught in Value traps in order to be worthwhile.
To make a long story short, the Value Leaders system is
based on a technique that has been very successful in the past:
marrying low valuation with high Relative Strength. At first
this might seem like an odd combination, but what this does
is find stocks that are still inexpensive, but have begun to
see strong money flows. Maybe the turnaround story is finally
gaining traction, or the cyclical trough is at hand, or new
management has been installed. Regardless of the catalyst, investors
are positioning themselves for better times ahead in a formerly
unloved name.
That’s the philosophy behind Value Leaders. Its published several times per week and can be found on the Stock Ideas Page.
Read a sample Value Leaders report now.
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Q: You
are a contributor on The Next Big Thing team. Tell us more
about the column and what, specifically, you provide.
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A:
Everyone likes a new story, and the IPO
pipeline is one of the best segments of the market to find them.
For those who haven’t seen it, The Next Big Thing report provides
fundamental analysis of upcoming IPOs, pricing reviews, and
after-market coverage for the most compelling names. We assign
an A-F grade to many of the deals, rating them strictly according
to their fundamentals at the time of the IPO. We also comment
on the “Buzz Factor” (or lack thereof) surrounding certain deals.
As for my contribution, I’m part of the team that provides write-ups
on upcoming deals and assign grades to them. My favorite types
of IPOs to analyze include the two extremes: either companies
that have great fundamentals but for whatever reason are lacking
“buzz” (KORS comes to mind here), or companies with a lot of
buzz but terrible fundamentals (GRPN and LEDS fit this category).
Read a sample Next Big Thing report now.
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Samples of Jim's Analysis
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VALUE LEADERS
Value Leaders Rankings For October 30, 2013
The following table contains a list of stocks that we believe should be particularly attractive to value and yield investors who want to avoid "value traps." EV components are derived from a quantitative screen and ranking system that is designed to uncover companies that possess a combination of low valuations across a variety of metrics, superior 6-month Relative Strength, and shareholder-friendly managements that pay healthy dividends and/or have active share buybacks in place. There are no growth or market cap criteria applied to this list.
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THE NEXT BIG THING
The Week Ahead (QTWO, PCTY, ATEN, BRDR, AKBA, AMBR, MDWD, VSAR, TSLX ...CSLT)
Castlight Health (CSLT), a cloud computing company developing software that seeks to lower health insurance costs for employees and corporations, launched higher at the opening this morning with an astounding 134% pop from its IPO price. CSLT's moon-shot comes at a fortunate time for next week's batch of IPOs as there are four companies that characterize themselves as "cloud computing companies."
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EMERGING GROWTH STOCKS
SuperCom (SPCB): Speculative but Recent Acquisition That Triples Revs May Get Name Noticed in 2014
Emerging Growth component SuperCom (SPCB), an Israel-based provider of security products, is jumping 15% today following its Q4 earnings report this morning. Since the name is not well known and has no sell side analyst coverage, we wanted to provide some quick color. We caution that it's a speculative name but a recent acquisition that triples its revenue makes SuperCom a name to watch in 2014.
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Featured Events and Demos
Watch our recent webinar events to learn
more about Jim's analysis and strategies. Quick Video Demos provide
additional information on the specific columns that Jim created or to which he is a regular contributor.
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How To Identify Early-Stage Growth Stock Ideas
Jim provides an in-depth look at how to screen for early-stage growth stock ideas, and what fundamental and technical criteria to look for. Specifically, what makes an “early-stage” idea, Growth stock screening criteria, what makes a "story stock", technical chart characteristics, and the best resources and examples.
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How to Uncover The Next Generation Of Leading Stocks
Jim discusses how to use the Emerging Growth Stocks system to uncover the next leading stocks. He provides a detailed overview of how the system works and answers some frequently-asked questions such as how to interpret new additions and deletions, how to interpret Relative Strength rankings, and reviews some popular strategies for using the system.
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Quick Video Demos
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What Is Emerging Growth?
Creator Jim Busch provides a brief introduction
to Emerging Growth an exclusive feature of
Briefing In Play Plus.
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What is Emerging Value?
Emerging Value is exclusive content found on the
Briefing In Play Plus service. You'll find
a concentrated list of stocks featuring low valuations and high dividend yields that are undergoing investor accumulation. Similar to Emerging Growth, Emerging Value is a purely quantitative system that combines both fundamental and technical criteria to generate a new list of top-ranked stocks every week.
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