The best I can say, I’ve never gone broke, at least not yet, and I’ve been in the market since 1954. Light weight, I’ve never had a great amount to invest, but managed to live modestly on my returns. Over the years, a few guidelines have proved helpful. It’s a cold foggy and snowing Saturday after a week in which the market is changing with maybe the beginning of rising intersex rates. I’m inclined to share some of what I’ve learned.
First, I think that most of the investment gurus who force you to listen to an hour of their BS before offering a single stock tip and a promise of many more for only some thousands of dollars a year, but with this onetime only offer of $49.99 — amount to investors who failed at some point along the way and turn to the internet want-to-be for a recovery.
My father did well with IBM and Anheuser-Bush; he was shroud, I was not. My first stock was General Dynamics. I held it far a long time and nothing much changed. Then I read The Battle for Investment Survival, Gerald M. Loeb 1935 with some 13 reprints and counting. — basically stay in cash until you spot a high probability of 100% growth, stop your losses and don’t bet the farm.
Doctors are inclined to brag about their losses in the surgeon’s lounge, and then one day a radiologist who was inclined to remain silent, shared his stock market graphs. He was the only one not suffering loses. From then on, I became a chartist. I followed every pattern I could find. Equities are not a zero net gain gabble. Options are. Equities tend to grow over time despite their ups and downs and occasional company failure. None the less, I believe that one must be in the market on a daily basis and monitor your companies as your own. I’ll list a few things I look for. Obviously I’m thinking about it.
- Is it a strong company favored currently by institutional investors, a leading market segment.
- Accelerated earnings, good chart pattern
- I do technology almost exclusively because I tend to understand the science.
- With rising interest rates, companies with little or no debt
- The PEG, the ratio of %growth to the Price earnings ratio, (1) or less is good, include R&D
- A chart that shows a promising pattern. Otherwise you tend to buy high
- Look for the inflection point on a cup and handle pattern or a W shaped pattern —
- Having said that, buy low and sell high!
- Check over sold / under sold, various chart indicators like Bollinger Bands or MACD.
- Draw a linear regression line to see a clear statistical line of progress.
- Buy below the line and sell above the line.
- Look for operating margins 20% or more. Same for return on equity
- Look for a company, you know something about that the market undervalues.
- Look for 100% Groth probability and buy early.
- Selling high or long term hold is my hardest decision
- Look for owner participation and insider trading
- Look for increasing institutional buying
- The average daily volume, times 20, divided by the float, shows relative current activity and interest
- Market liquidity can be seen as a proxy in the Daily Treasury revenue compared year over.
- Interest rates inhibit, inflation drives higher
- Of these, read the charts, all of them, every day, 3 day, 3mo, 1 year.
- Study A/D accumulation distribution which you can see on the candle graph.
- Don’t talk about it. Don’t listen to others. Don’t follow stock tips - queers the deal.
- Discipline yourself to distinguish gambling from investing.
- Keep it simple within your own capacity.
- Preserve capital above all
Comments