Chapter 14

The Seasonal Strategy

This strategy is moderately conservative because it involves buying and holding stocks for time periods of 1-8 weeks before selling them. It takes approximately 30 minutes to learn how to do this strategy. And, it takes approximate 30 hours of learning time on your part to decide on a company or companies to invest in. Finally it only take 5-10 minutes to actually buy the stock you are interested in.

There are no guarantees, but in one year you can earn between 100% and 300% on the money that you invest using your knowledge (as described below) and this strategy. The higher percentage requires more learning, vigilance (watching of the stock price), decision timing, and stock trading (buying and selling) on your part. It is also more achievable through the use of margin buying, which definitely adds more financial risk.

The Psychology

The seasonal strategy is based on the following very simple psychological condition. There are many strong or large companies which specialize in products and/or services which generate significantly more money for the companies during certain times of the year. This obvious profit ebb and flow is often noticed by investors who are interested in investing in those companies. The vast majority of investors probably only notice the rise and fall in profits, not that there is a highly predictive pattern to the rise and fall. Because investors notice the rise and fall in profits, they buy and sell the stock accordingly. This is because they feel emotional about the rise and fall on the short term instead of ignoring the short term changes in favor of the long term growth of the strong companies involved or the long term decline of the weak companies.

On initial thought about this predictive psychology, one would be led to think that it is very easy to find companies which would fit this profile of seasonal ebbs and flows of profit. Not so my somewhat 'greedy' or somewhat 'lazy' friends. There is always much more work involved in making much more money than the average investor. That is why most people are reluctant to be millionaires. They don't have the confidence to consider new ideas or keep doing the harder things until they pay off.

The following things make it harder to find companies which fit the seasonal strategy.

• First of all many companies which have well defined seasonal products and services are not publicly traded companies. So, because they are privately owned companies, there is no stock on the stock market for you to invest in or trade with. Rats! (with no offense intended to actual rats).

• Second, many companies which have seasonal products/services and which are publicly traded have discovered how to balance their single season cash flow with other products/services such that there are no significant predictable rises and dips in their earnings during the year. Double rats!!

• Third, many other companies which have seasonal products/services and which haven't 'fixed' those financial peaks and valleys, are owned by larger companies. So, once again, there is no stock from the smaller company (the seasonal one) for you to invest in or trade. Triple rats!!!

• Finally, some seasonal companies, which are publicly traded, are not noticed by investors in such a way as to cause the stock price to rise and fall in predictable patterns. Quadruple rats!!!!

Dr. Nowell, in conjunction with The Development Center, has compiled a list of Seasonal Stocks that are suitable for use with this strategy and it is sold separately from the book. The entire Seasonal Strategy is included with your purchase of the Seasonal Stock List.

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