Fundamental Analysis and Position Trading: Evolution of a Trader

Fundamental Analysis and Position Trading: Evolution of a Trader

by Thomas N. Bulkowski
Released December 2012
Publisher(s): Wiley
ISBN: 9781118464205

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Book description

Comprehensive coverage of the four major trading styles

Evolution of a Trader explores the four trading styles that people use when learning to trade or invest in the stock market. Often, beginners enter the stock market by:

  • Buying and holding onto a stock (value investing). That works well until the trend ends or a bear market begins. Then they try

  • Position trading. This is the same as buy-and-hold, except the technique sells positions before a significant trend change occurs.

  • Swing trading follows when traders increase their frequency of trading, trying to catch the short-term up and down swings. Finally, people try

  • Day trading by completing their trades in a single day.

This series provides comprehensive coverage of the four trading styles by offering numerous tips, sharing discoveries, and discussing specific trading setups to help you become a successful trader or investor as you journey through each style.

Trading Basics takes an in-depth look at money management, stops, support and resistance, and offers dozens of tips every trader should know.

Fundamental Analysis and Position Trading discusses when to sell a buy-and-hold position, uncovers which fundamentals work best, and uses them to find stocks that become 10-baggers—stocks that climb by 10 times their original value.

Swing and Day Trading reveals methods to time the market swings, including specific trading setups, but it covers the basics as well, such as setting up a home trading office and how much money you can make day trading.

Table of contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Preface
    1. EVOLUTION OF A TRADER
    2. CONTENT OVERVIEW
    3. INTENDED AUDIENCE
  6. Acknowledgments
  7. Chapter 1: Introduction to Buy-and-Hold
    1. WHAT IS BUY-AND-HOLD?
    2. WHO SHOULD BUY AND HOLD?
    3. MY NUMBERS: BACKGROUND AND TERMS
    4. NOW WHAT?
  8. Chapter 2: Stock Selection
    1. WHAT COMES AFTER LARGE PRICE MOVES?
    2. MYTH: STOCKS THAT DROP LEAST IN A BEAR MARKET THEN SOAR
    3. STOCK SELECTION THE EASY WAY
    4. TWO TIPS FOR STOCK SELECTION
    5. BUY FALLEN ANGELS
    6. WHAT CHART PATTERNS APPEAR BEFORE MERGERS AND BUYOUTS?
    7. WHAT ARE INSIDERS DOING?
    8. CHAPTER CHECKLIST
  9. Chapter 3: Book Value
    1. BOOK VALUE DEFINED
    2. VALUE ASSETS PROPERLY
    3. INVESTING USING BOOK VALUE
    4. WHEN IS BOOK VALUE IMPORTANT?
    5. THE VALUE OF HIDDEN ASSETS
    6. LIMITS OF BOOK VALUE
    7. BUYBACKS LOWER BOOK VALUE
    8. HISTORICAL RESEARCH
    9. PRICE TO BOOK VALUE: A GOOD MEASURE
    10. SMALL CAPS: BEST CHOICE
    11. LOW STOCK PRICE RULES!
    12. BOOK VALUE AND RETURN ON EQUITY
    13. WHAT IS THE BEST PRICE TO BOOK VALUE?
    14. COMBINATIONS AND PERFORMANCE
    15. TRADING STRATEGY: BEATING THE DOW
    16. THE EIGHT-STOCK SETUP
    17. HOLD TIME FOR BEST RESULTS
    18. CHAPTER CHECKLIST
  10. Chapter 4: Capital Spending
    1. IS DECREASING CAPITAL SPENDING THE HOLY GRAIL?
    2. CAPITAL SPENDING TRENDS VERSUS PERFORMANCE
    3. FREQUENCY DISTRIBUTION
    4. PERFORMANCE BY MARKET CAP
    5. CHAPTER CHECKLIST
  11. Chapter 5: Cash Flow
    1. HISTORICAL RESEARCH REVIEW
    2. COOKING THE BOOKS
    3. THE NUMBERS
    4. IS INCREASING CASH FLOW GOOD?
    5. PERFORMANCE BY MARKET CAP
    6. CHAPTER CHECKLIST
  12. Chapter 6: Dividends
    1. STOCK DIVIDENDS: AN EXPLANATION
    2. HISTORICAL RESEARCH REVIEW
    3. HIGH YIELD, HIGH PERFORMANCE?
    4. TESTING: YIELD AND PAYOUT RATIO
    5. WHICH IS BEST: DIVIDENDS OR NO DIVIDENDS?
    6. SURPRISE: DIVIDEND CUTS WORK!
    7. WHEN DISASTER STRIKES
    8. PERFORMANCE BY MARKET CAP
    9. CHAPTER CHECKLIST
  13. Chapter 7: Long-Term Debt
    1. THE NUMBERS
    2. IS DEBT GOOD?
    3. SINKING SHIP: TAKING ON DEBT
    4. DEBT BY MARKET CAPITALIZATION
    5. CHAPTER CHECKLIST
  14. Chapter 8: Price-to-Earnings Ratio
    1. HISTORY LESSON
    2. DO LOW P/E STOCKS OUTPERFORM?
    3. P/E TRENDS DOWN: GOOD OR BAD?
    4. PRICE AND EARNINGS COMBINATIONS: YAWN
    5. BUY SMALL CAPS WITH LOW P/E
    6. HIGH P/E: TIME TO SELL?
    7. THREE P/E TIPS
    8. CHAPTER CHECKLIST
  15. Chapter 9: Price-to-Sales Ratio
    1. GOOD BENCHMARK: PSRS BELOW 1.0
    2. PSR TREND: DOWN IS BEST
    3. SMALL CAPS, SMALL PSRS RULE!
    4. CHECKLIST: PSRS BY INDUSTRY
    5. CHAPTER CHECKLIST
  16. Chapter 10: Return on Shareholders' Equity
    1. LOW ROE STOCKS OUTPERFORM: WHY?
    2. ROE TREND OVER TIME: YAWN
    3. ROE PERFORMANCE BY MARKET CAPITALIZATION
    4. CHAPTER CHECKLIST
  17. Chapter 11: Shares Outstanding
    1. PERFORMANCE VERSUS SHARES OUTSTANDING
    2. EVENT PATTERN: DUTCH AUCTION TENDER OFFERS
    3. SHOULD YOU SELL?
    4. SELL AT WHAT PRICE?
    5. EVENT PATTERN: COMMON STOCK OFFERINGS
    6. PERFORMANCE AND MARKET CAPITALIZATION
    7. CHAPTER CHECKLIST
  18. Chapter 12: Fundamental Analysis Summary
    1. PERFORMANCE RANK: ONE-YEAR HOLD
    2. PERFORMANCE RANK: THREE-YEAR HOLD
    3. PERFORMANCE RANK: FIVE-YEAR HOLD
  19. Chapter 13: How to Double Your Money
    1. HOW LONG TO DOUBLE?
    2. WHAT IS THE BEST BUY PRICE?
    3. WHICH MARKET CAPS DO BEST?
    4. FOCUS ON FUNDAMENTALS: WHICH ARE BEST?
    5. WARNING: LOSSES AHEAD. WHAT YOU NEED TO KNOW
    6. TESTING THE SETUP
    7. CHAPTER CHECKLIST
  20. Chapter 14: Finding 10-Baggers
    1. HOW LONG TO 10X?
    2. WHAT IS HIGHEST STARTING PRICE?
    3. WHAT HAPPENS THE FIRST YEAR?
    4. RISING OVER TIME: HOW FAST?
    5. 10-BAGGERS BY MARKET CAP
    6. FUNDAMENTAL RATIOS COMMON TO 10-BAGGERS
    7. INDUSTRIES MOST LIKELY TO MAKE 10-BAGGERS
    8. THE MOST POPULAR YEARS FOR 10-BAGGERS
    9. SURPRISING FINDING ABOUT 10-BAGGER LOSSES
    10. BACKWARD TESTING
    11. CHAPTER CHECKLIST
  21. Chapter 15: Trading 10-Baggers
    1. 10-BAGGER BIRTH
    2. LIFE OF A 10-BAGGER
    3. 10-BAGGER DEATH
    4. CHART PATTERNS IN 10-BAGGERS
    5. CHAPTER CHECKLIST
  22. Chapter 16: Selling Buy and Hold
    1. THE WEINSTEIN SETUP
    2. EXAMPLE: THE SOUTHWEST AIRLINES TRADE
    3. EXAMPLE: SAVIENT PHARMACEUTICALS
    4. 1-2-3 TREND CHANGE FOR DOWNTRENDS
    5. 1-2-3 TREND CHANGE FOR UPTRENDS
    6. THE CLOUDBANK SETUP
    7. USING TRAILING STOPS TO SELL
    8. TIMELY TREND-LINE EXITS
    9. CAN MOVING AVERAGES HELP?
    10. FOLLOW INSIDER TRANSACTIONS
    11. SELLING: TWO RATIO TIPS
    12. SELLING DOWN FROM A HIGH
    13. CHAPTER CHECKLIST
  23. Chapter 17: Fundamentals: What I Use
    1. TWO BOOK VALUE TIPS
    2. DO NOT GET SINGED BY BURN RATE
    3. DROP CAPITAL SPENDING!
    4. CURRENT RATIO 2.0
    5. PROSPECTING FOR GROWTH USING DIVIDENDS
    6. RISING EARNINGS, NET PROFIT
    7. P/E RATIO VERSUS INDUSTRY
    8. LITIGATION: STOP PISSING PEOPLE OFF!
    9. AVOID TOO MUCH LONG-TERM DEBT
    10. MARKET CAPITALIZATION: BIG RETURNS BY GOING SMALL
    11. RESEARCH SPENDING
    12. SALES? THINK MONEY
    13. PRICE-TO-SALES RATIO: WHAT ABOUT DEBT?
    14. STOCK PRICE: 5 TO 20
    15. VOLUME: THIN ICE AHEAD!
    16. CHAPTER CHECKLIST
  24. Chapter 18: Introduction to Position Trading
    1. WHAT IS POSITION TRADING?
    2. WHO SHOULD POSITION TRADE AND WHY?
    3. WHAT POSITION TRADING WILL NOT DO
    4. EXAMPLE POSITION TRADE
    5. CHAPTER CHECKLIST
  25. Chapter 19: Getting Started in Position Trading
    1. CHECK THE NEWS OR LOSE!
    2. TREND? WHAT TREND?
    3. TRADE WITH THE PRIMARY TREND
    4. TAKE YOUR PICK: BOTTOM FISHING OR MOMENTUM?
    5. WHAT IS MARKET INFLUENCE ON STOCKS?
    6. WHAT CHART PATTERNS ARE BEST FOR POSITION TRADES?
    7. BUSTED CHART PATTERNS REVISITED
    8. TRADING EXAMPLE: FINDING VALUE IN DISASTER
    9. CHAPTER CHECKLIST
  26. Chapter 20: Ten Factors Make Chart Patterns Work
    1. WHAT IS A DOUBLE BOTTOM?
    2. TEN FACTORS REVEALED
    3. SCORING SYSTEM CHECKLIST
    4. SCORING PERFORMANCE
    5. HIGHER SCORES WORK BEST
    6. CASE STUDY: STILLWATER MINING
    7. CASE STUDY: LSB INDUSTRIES
    8. CASE STUDY: LUMBER LIQUIDATORS
    9. CHAPTER CHECKLIST
  27. Chapter 21: Three Winning Trades and a Funeral
    1. THE INTEL FIASCO
    2. HUDSON HIGHLAND HICCUP
    3. CNO FINANCIAL GROUP
    4. COMPLETE PRODUCTION SERVICES
    5. CHAPTER CHECKLIST
  28. Chapter 22: What Not to Do: Three Botched Trades
    1. MEDIVATION: SELLING TOO LATE
    2. COLDWATER CREEK: SELLING TOO SOON
    3. HOVNANIAN: SELLING AT THE BOTTOM
    4. CHAPTER CHECKLIST
  29. Chapter 23: What We Learned
    1. CHAPTER 2: STOCK SELECTION
    2. CHAPTER 3: BOOK VALUE
    3. CHAPTER 4: CAPITAL SPENDING
    4. CHAPTER 5: CASH FLOW
    5. CHAPTER 6: DIVIDENDS
    6. CHAPTER 7: LONG-TERM DEBT
    7. CHAPTER 8: PRICE-TO-EARNINGS RATIO
    8. CHAPTER 9: PRICE-TO-SALES RATIO
    9. CHAPTER 10: RETURN ON SHAREHOLDERS EQUITY
    10. CHAPTER 11: SHARES OUTSTANDING
    11. CHAPTER 12: FUNDAMENTAL ANALYSIS SUMMARY
    12. CHAPTER 13: HOW TO DOUBLE YOUR MONEY
    13. CHAPTER 14: 10-BAGGERS
    14. CHAPTER 15: TRADING 10-BAGGERS
    15. CHAPTER 16: SELLING BUY AND HOLD
    16. CHAPTER 17: FUNDAMENTALS, WHAT I USE
    17. CHAPTER 18: INTRODUCTION TO POSITION TRADING
    18. CHAPTER 19: GETTING STARTED IN POSITION TRADING
    19. CHAPTER 20: TEN FACTORS MAKE CHART PATTERNS WORK
    20. CHAPTER 21: THREE WINNING TRADES AND A FUNERAL
    21. CHAPTER 22: WHAT NOT TO DO: THREE BOTCHED TRADES
  30. Visual Appendix of Chart Patterns
  31. Bibliography
    1. OTHER SITES OF INTEREST
  32. About the Author
  33. Index

Product information

  • Title: Fundamental Analysis and Position Trading: Evolution of a Trader
  • Author(s): Thomas N. Bulkowski
  • Release date: December 2012
  • Publisher(s): Wiley
  • ISBN: 9781118464205