Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

CalAmp Corp. (CAMP), athenahealth, Inc (ATHN), Apple Inc. (AAPL): 3 Essential Rules For Aggressive Growth Investing

How does an investor mitigate this risk? Research, research and more research.

I began my career as a journalist, and I learned there was no substitute for good old-fashioned shoe-leather reporting. That’s what brought me to one of my best picks, athenahealth, Inc (NASDAQ:ATHN), a health care IT provider that has returned a phenomenal 203%.

How many stocks in your portfolio were able to harness the power of a game-changer like that?

Aggressive growth investors must cut through all the hype. They must prosecute every claim. They must use facts and hard data to quantify a stock’s likelihood to head skyward.

Rule No. 2: Aggressive growth investors must be patient
Gains can take time to achieve — time that should be marked in years, not weeks or even months. Aggressive investors are by nature contrarians, as they are usually betting on developments the rest of the market has not yet perceived, and they must have strong conviction in these “buy” decisions to weather the storm. (Because sooner or later, it always storms.)

Consider Apple Inc. (NASDAQ:AAPL), a hall-of-fame game-changer if there ever was one.

The iPod, the device that began Apple Inc. (NASDAQ:AAPL)’s transformative march, was released in November 2001. The share price was around 20 bucks at that time, and the stock was functionally dead money for two years. But investors who had the foresight to see where Apple Inc. (NASDAQ:AAPL) was headed scored big.

Thereafter, the shares rallied, though the company also saw periods where the stock turned strongly negative. But look what happened if you held Apple Inc. (NASDAQ:AAPL) from 2001 through today…

To echo my earlier point: Research-driven conviction brings on confidence, and confidence brings about resiliency. The aggressive investor must nurture all of these virtues.

The third and final rule in aggressive growth investing is simple: Allocation, allocation, allocation.

I said earlier that all portfolios should have an aggressive growth component. But the aggressive growth segment of a portfolio, because of its risk profile, should be only a small percentage of total assets. I like the 10% rule, but it should never be more than 20%.

Is that too little? No. It’s just prudent. That’s enough upside potential to move the needle on your overall portfolio without shouldering an excessive amount of downside risk. That doesn’t mean that the other 80% to 90% of your portfolio can’t seek growth, it only means limiting exposure to the most aggressive securities.

Action to Take –> Following these three rules isn’t easy. Heck, if it was, everyone would be rich. And I would’ve invested in Apple Inc. (NASDAQ:AAPL) back in 2001 and be lounging on a beach right now. But these three rules have guided me to a string of triple-digit gains over the years, and there’s no reason why they can’t do the same for you.

– Andy Obermueller

Warren Buffett’s Top 5 Stocks Buffett’s firm, Berkshire Hathaway, holds dozens of stocks. But these five make up 75% of its portfolio… worth $65 billion. Click here to get Buffett’s top 5 stocks plus his 16 latest buys, FREE.

.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.