Obviously everyone is different and has different risk tolerances, but I can talk a little about what has worked for me in the past to achieve these results.
First Base: Start with a good large cap dividend base. Stocks like Microsoft (MSFT) and Intel (INTC) have dividends around 3% and are growing as well. If you employ a dividend reinvestment strategy here it will allow for larger returns. They also happened to be Value plays when I started a position.
Second Base: Use mutual funds to gain access to some of the best money mangers out there. American funds are my favorite and funds like Investment Company of America, (AIVSX) and Washington Mutual, (WSHCX), have performed well over the last 5-10 years in up and down markets. In addition, some funds like the Putnum Equity Spectrum Fund (PYSCX) are a hedge play as the manager is allowed to short a large portion of the portfolio.
Third Base: VALUE! I recently sold my entire Bank of America (BAC) position. However I made over 150% from that position which I started in October of 2011. Other companies like Ford Motor Company (F) appreciated 20% in the 2.5 years I owned it.(along with a nice dividend)
Swing For The Fences! I hit a home run on Micron, (MU). I started a position in 2010 at $7.12 a share. I bought more at $10.20 a share 6 months later. The stock then proceeded to tank, ( DRAM pricing and a nasty lawsuit), but I still loved the story of the company and thought this could be a big one. I was in the red for about a year and a half. I was patient and I eventually accumulated a 4,500 share position with an average cost basis of $7.07 a share. I just sold 10% of that position at a 300% gain.
Where are the Next Home Runs??? I currently like Quicksilver, (ZQK) and Applied Micro Circuits, (AMCC). Quicksilver has solid management and is both a gut play as well as now a Value play. I started my position at $6.16 in March of last year and added to it at $5.53 in August of that same year. I just added again at $3.73. The stock missed on the numbers but according to research it can go much higher. Insider buying and rumors of a possible takeover help as well. AMCC is gaining market share in the server microchip segment with its X-GENE chip. Raymond James rates it a Strong Buy 1 and has a price target of $17 a share.
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