10 : the essential rules for beating the market

The Essential Rules for Beating the Market......Page 1
Contents......Page 9
Foreword......Page 11
Preface......Page 13
Acknowledgments......Page 21
Introduction......Page 23
Why Invest in the Market at All?......Page 24
Why Most Investors Fail to Make Consistent Profits in the Stock Market......Page 26
The Dream World of Mutual Funds and Indexes......Page 28
Out of the Frying Pan and into the Fire—or How Emotions Can Ruin Your Day......Page 29
You Can Remove Emotion from Investing......Page 32
It’s Time to Kick the Habit......Page 34
Rule 1: Think like a Fundamentalist......Page 37
Your Rights as a Shareholder......Page 39
Objective......Page 41
Fundamentals Matter—Just Not All of Them......Page 42
Why Risk Can Be Mitigated with Strong Fundamentals......Page 45
Why I Am Not a Fundamental Purist......Page 48
And Now a Little Physics Lesson......Page 49
Supply and Demand—the Only Reason Why Stock Prices Fluctuate......Page 50
Demand Fundamentals: The Key to Stock Selection......Page 52
How to Use Demand Fundamentals to Find the Best Stock......Page 54
Reduce the Size of Your Universe......Page 57
Rule 2: Spend Your Money Wisely—The Value Rule......Page 59
Why a Value Investment Strategy Can Be Wrong For You......Page 62
How to Use PE Ratios to Avoid Paying Too Much for a Stock......Page 65
How to Avoid the PE Misconception......Page 67
Why Size Matters......Page 70
Building a Bridge over the Colorado River and Why It Matters to Your Investment Strategy......Page 71
Rule 3: Trade like a Technician......Page 75
Putting This All in Perspective......Page 76
Types of Technical Analysis Systems......Page 77
Reading Charts Is Easy—Finding the Right Chart to Read Is the Key......Page 79
Building the Right Technical Chart......Page 82
Avoiding the Noise of the Market......Page 89
Reading the Tea Leaves......Page 90
Rule 4: The Stop Loss Rule......Page 93
Going with the Flow......Page 95
The Primary Reason to Own Stocks......Page 98
But When Should I Sell?......Page 100
Timing Is Everything......Page 102
The Intelligent Stop Loss Strategy......Page 105
Volatility and the Stop Loss Price......Page 107
Rule 5: Never Marry a Stock (For Adults Only!)......Page 115
More Love, Less Money......Page 116
Leaving the Past Behind......Page 118
So...Are You Married to a Stock?......Page 120
How to Avoid Falling in Love with a Stock......Page 123
Rule 6: Follow Only “Some” Insider Trading......Page 125
What Is Insider Trading?......Page 126
Some Insider Trading Is Great News......Page 127
How to Use Insider Buying Information......Page 128
Rule 7: Watch the Institutional Ownership......Page 131
Don’t Be Misled......Page 132
The Problems of Being a Major Institution......Page 133
Don’t Believe the Wall Street Titans......Page 134
How to Use Institutional Trading......Page 135
You Can Not Only Look Over the Fence—You Can Hop Over It!......Page 136
How to Interpret Institutional Ownership......Page 139
Do Not Put All Your Eggs in One Basket......Page 143
How to Be Diversified......Page 146
How to Enforce Diversification......Page 158
Determining Industry Distribution......Page 163
Determining Sector Distribution......Page 164
The Right Diversification Strategy......Page 167
Rule 9: Balance Your Risk through Smart Asset Allocation......Page 169
How Can I Minimize Risk While Making Profits?......Page 170
Keep Your Portfolio Equally Weighted......Page 171
Rule 10: Make a Lot More Money by Timing the Market......Page 177
Why Having a Long-Term Investment Horizon Is Wrong......Page 179
The Historical Market Chart as Defined by the Dow......Page 181
The Market Trend and Correction Forecast......Page 184
How to Trade for Free (Almost)......Page 187
Sector and Industry Charts......Page 189
Epilogue: Making the Commitment to Being a Rules -Based Investor......Page 195
Appendix A: Understanding Stop Loss Orders......Page 197
Appendix B: Scoring the Fundamentals......Page 201
Scoring the Fundamentals......Page 202
About the Author......Page 209
Index......Page 211