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10: The Essential Rules for Beating the Market

Book Description

10 takes you step by step through the process of creating a market-beating stock portfolio, and shows you how to trade stocks using a combination of both fundamental and technical analysis. With this book as your guide, you'll quickly learn how to get into a stock at the right time and, more importantly, when to exit that position. You'll also discover how to view the market and interpret what is happening on a broader scale, so you can maximize profits on individual positions and boost the overall performance of your portfolio.

Table of Contents

  1. Copyright
  2. Foreword
  3. Preface
  4. Acknowledgments
  5. Introduction
    1. Why Invest in the Market at All?
    2. Why Most Investors Fail to Make Consistent Profits in the Stock Market
    3. The Dream World of Mutual Funds and Indexes
    4. Out of the Frying Pan and into the Fire—or How Emotions Can Ruin Your Day
    5. You Can Remove Emotion from Investing
    6. It's Time to Kick the Habit
  6. 1. Think like a Fundamentalist
    1. 1.1. Your Rights as a Shareholder
    2. 1.2. Objective
    3. 1.3. Fundamentals Matter—Just Not All of Them
    4. 1.4. Why Risk Can Be Mitigated with Strong Fundamentals
    5. 1.5. Why I Am Not a Fundamental Purist
    6. 1.6. And Now a Little Physics Lesson
    7. 1.7. Supply and Demand—the Only Reason Why Stock Prices Fluctuate
    8. 1.8. Demand Fundamentals: The Key to Stock Selection
    9. 1.9. How to Use Demand Fundamentals to Find the Best Stock
    10. 1.10. Reduce the Size of Your Universe
  7. 2. Spend Your Money Wisely—The Value Rule
    1. 2.1. Why a Value Investment Strategy Can Be Wrong For You
    2. 2.2. How to Use PE Ratios to Avoid Paying Too Much for a Stock
    3. 2.3. How to Avoid the PE Misconception
    4. 2.4. Why Size Matters
    5. 2.5. Building a Bridge over the Colorado River and Why It Matters to Your Investment Strategy
  8. 3. Trade like a Technician
    1. 3.1. Putting This All in Perspective
    2. 3.2. Types of Technical Analysis Systems
    3. 3.3. Reading Charts Is Easy—Finding the Right Chart to Read Is the Key
    4. 3.4. Building the Right Technical Chart
    5. 3.5. Avoiding the Noise of the Market
    6. 3.6. Reading the Tea Leaves
  9. 4. The Stop Loss Rule
    1. 4.1. Going with the Flow
    2. 4.2. The Primary Reason to Own Stocks
    3. 4.3. But When Should I Sell?
    4. 4.4. Timing Is Everything
    5. 4.5. The Intelligent Stop Loss® Strategy
    6. 4.6. Volatility and the Stop Loss Price
  10. 5. Never Marry a Stock (For Adults Only!)
    1. 5.1. More Love, Less Money
    2. 5.2. Leaving the Past Behind
    3. 5.3. So ... Are You Married to a Stock?
    4. 5.4. How to Avoid Falling in Love with a Stock
  11. 6. Follow Only "Some" Insider Trading
    1. 6.1. What Is Insider Trading?
    2. 6.2. Some Insider Trading Is Great News
    3. 6.3. How to Use Insider Buying Information
  12. 7. Watch the Institutional Ownership
    1. 7.1. Don't Be Misled
    2. 7.2. The Problems Of Being a Major Institution
    3. 7.3. Don't Believe the Wall Street Titans
    4. 7.4. How To Use Institutional Trading
    5. 7.5. You Can not Only Look Over the Fence—You Can Hop Over it!
    6. 7.6. How To Interpret Institutional Ownership
  13. 8. Stay Diversified
    1. 8.1. Do Not Put All Your Eggs in One Basket
    2. 8.2. How to Be Diversified
      1. 8.2.1. Industries in the Basic Materials Sector
      2. 8.2.2. Industries in the Capital Goods Sector
      3. 8.2.3. Industries in the Consumer Cyclical Sector
      4. 8.2.4. Industries in the Consumer Goods Sector
      5. 8.2.5. Industries in the Consumer Non-Cyclical sector
      6. 8.2.6. Industries in the Financial Sector
      7. 8.2.7. Industries in the Health Care Sector
      8. 8.2.8. Industries in the Industrial Goods Sector
      9. 8.2.9. Industries in the Services Sector
      10. 8.2.10. Industries in the Technology Sector
      11. 8.2.11. Industries in the Transportation Sector
      12. 8.2.12. Industries in the Utilities Sector
    3. 8.3. How to Enforce Diversification
    4. 8.4. Determining Industry Distribution
    5. 8.5. Determining Sector Distribution
    6. 8.6. The Right Diversification Strategy
  14. 9. Balance Your Risk through Smart Asset Allocation
    1. 9.1. How Can I Minimize Risk While Making Profits?
    2. 9.2. Keep Your Portfolio Equally Weighted
  15. 10. Make a Lot More Money by Timing the Market
    1. 10.1. Why Having a Long-Term Investment Horizon Is Wrong
    2. 10.2. The Historical Market Chart as Defined by the Dow
    3. 10.3. The Market Trend and Correction Forecast
    4. 10.4. How to Trade for Free (Almost)
    5. 10.5. Sector and Industry Charts
  16. Epilogue: Making the Commitment to Being a Rules-Based Investor
  17. A. Understanding Stop Loss Orders
  18. B. Scoring the Fundamentals
    1. B.1. Scoring the Fundamentals
  19. About the Author