You are on page 1of 17

General

:
Pg 3:

***“When I started investing, I made most of the same mistakes you’ve probably made.”

“Now it’s up to you to learn how to intelligently take advantage of the relentless growth opportunities
America’s freedom makes possible and that entrepreneurs keep presenting…”

***“You are never too old or too young to start investing intelligently.”

***“The first step in learning how to pick big stock market winners is to examine leaders of the past.”

Pg 425:

“Forget your pride and ego; the market doesn’t care what you think or want.”

“No matter how smart you think you are, the market is always smarter.”

***“A high IQ and a master’s degree are no guarantee of market success.”

***“Your ego could cost you a lot of money.”

“Don’t argue with the market. Never try to prove you’re right and the market is wrong.”

Pg 427:

***“Get a job, get an education, and learn to save and invest wisely. Anyone can do it. You can do it.”

“Have courage, be positive, and don’t ever give up.”

“Get yourself prepared, study, learn, and go for them.”

“What you’ll find is that little acorns can grow into giant oaks, and that with persistence and hard work,
anything is possible.”

***“You can do it and your own determination to succeed is the most important element.”

Pg 174:

“Don’t ever get discouraged and give up on the lifetime opportunity that the stock market will provide.”

***“If you study, save, prepare and educate yourself, you too will be able to recognize many of the
future big winners as they appear.”

“You can do it, if you have the necessary drive and determination.”

“It doesn’t make any difference who you are or where you came from or your current position in life.”

“It’s all up to you. If you are not early. there are no good stocks-they are all bad…unless they go up. it goes up because of new products.” “Even when a low-ranked company has a decent price move. you'll never sell at the exact top.” First Edition pg 84: “The stock does not know who you are.” First Edition pg 82: “The whole secret to winning in the stock market is to lose the least amount possible when you're not right.” First Edition pg 93: “It is far better to sell early. Do you want to get ahead?” Pg 208: “In the battlefield that is the market.” First Edition Preface: ***“The stock market does not go up due to greed. there are the quick and there are the dead!” Pg 219: “When you make a mistake in the stock market. and new inventions.the ones sporting a proven record of excellence. but there are more disappointments in these lower categories.” “You need a roster of the very best players available . I have also never met a successful pessimist. one of the better-ranked stocks in the same industry probably advanced percentagewise much more. In the long run. they have seldom made anyone any money or provided any real happiness. the only sound thing to do is correct it. Don’t fight it. neither does vacillation when losses start to show up." “The innovative entrepreneurial companies with the best quality new products that serve people's needs are always the top stock market winners. and it doesn't care what you hope or want” .” First Edition pg 93: “Remember. new services. Pride and ego never pay off. so stop kicking yourself when a stock goes higher after you sell." First Edition pg 173: “Companies with poor ratings can perform. you will be late." ***"Don't be thrown off by the swarm of gloom and doomers.

but the RIGHT side.” HTMMSSS Pg 3: “There are two sides to everything—except the stock market! In the stock market there is only one side.” Successful Investor Foreword: “You don’t subscribe to a bunch of market newsletters or advisory services.” 24 Essential Pg 3: “Brains. and it isn’t the bull side OR the bear side. ego. are just expressing personal opinions that can be frequently wrong.First Edition pg 89: Letting your losses run is the most serious mistake made by almost all investors! You positively must accept that mistakes in either timing or selection of stocks are going to be made by even the most professional investors. and you don’t let yourself be influenced by recommendations from analysts who. again. First Edition pg 241: “It can be done. and your own determination to succeed is the most important element.” Successful Investor Foreword: *** “It doesn’t take a lot of money or an advanced degree.” HTMMSSS Foreword: “Buying without the ability to sell is like a football team that is all offense with no defense.” 24 Essential Pg 3: “Whether you’re a new or experienced investor. You can do it. It’s all up to you. sooner or later you’ll suffer some very large losses. So go for it. education. Anyone can do it. And if you don’t cut every loss quickly.” . the hardest lesson to learn is that you’re simply not going to be right all the time. stubbornness and price are deadly substitutes for having and following sound selling rules.

“ 24 Essential Pg 53: “Do you want stocks that have the greatest potential for moving even higher? Then. you do it after the stock has risen from your purchase price.” 24 Essential Pg 48: “Just remember buying at new highs is buying into emerging strength.” 24 Essential Pg 53: “What applies to buying merchandise on sale at a department store works in the completely opposite way when dealing with stocks. you’ve got to ignore the erroneous saying. And when you buy more. You buy higher-priced stocks rather than the lowest-priced stocks.” First Edition pg 172: “Relative strength measures the cold.” 24 Essential Pg 30: . not after it’s fallen below it. not when they’ve sunk so low that they look cheap. not on the way down. “buy low and sell higher.Strong RS/New Highs: Pg 3: “You should buy stocks when they’re on the way up in price. name. while those on the new low list tended to go lower.” Successful Investor Foreword: “You buy stocks nearer their highs for the year. You buy higher-priced stocks rather than the lowest-priced stocks.” “You buy stocks when they’re nearer to their highs for the year. and image. realistic auction marketplaces' appraisal of a stock. not on the way down.” “Stocks on the new-high list tended to go higher in price.” Successful Investor Foreword: “You buy stocks on the way up in price. and what seems low and cheap usually goes lower. in spite of the theoretical value of the company or its past popularity. not when they’ve sunk so low they look cheap.” Pg 174: “What seems too high in price and risky to the majority usually goes higher eventually.” and replace it with “buy high and sell a lot higher.

” Pg 207: “If you have a 33% loss in a portfolio of stocks.” 24 Essential Pg 31: “Relative price performance is a good way to tell which of the five or six stocks you own is your true leader. If you’re going to do any selling.“I suggest you restrict your stock selection to stocks showing a Relative Price Strength Rating of 80 or higher.” “You learn to always sell stocks quickly when you have a small loss rather than waiting and hoping they’ll come back.” Money Management: Pg 3: ***“And when you buy more. it’s normally correct to weed the flower patch by selling your worst-performing stocks first. not after it has fallen below it.” . you need a 50% gain just to get to your breakeven point.” 24 Essential Pg 32: “If a stock has been holding an RS Rating in the 80s or 90s for many months. so you’re selecting companies that are in the top 20% in performance. the first time its rating drops below 70 may be a good time to re-evaluate your position and consider selling. mediocre performing companies that will hold back your overall performance. you do it only after the stock has risen from your purchase price.” 24 Essential Pg 30: “I never argue with the market by trying to buy or hold stocks with a poor Relative Price Strength Rating of 70 or below.” 24 Essential Pg 30: “Relative Price Strength Rating helps you cut out the vast majority of laggard.” 24 Essential Pg 31: ***“I also like to note on big down days in the general market which individual stocks buck the trend and are actually up in price and unusual amount for the day.

In so doing.” Successful Investor Foreword: “Like the x-rays used by doctors.” Successful Investor Foreword: “Charts can help improve your selection of the best stocks and timing of both buy and sell decisions in stocks. as you will see.” Successful Investor Foreword: “A picture. is worth a thousand words. And that. is healthy or sick. they let you know if you should be in or out of the stock or in out of the market. And not just in words. charts tell you at a knowledgeable glance if an individual stock. they couldn’t get you out of the pool. and perhaps a few swimming lessons. You were probably afraid of the water the first time you were taken to a swimming pool.” Pg 110: ***“Would you allow a doctor to open you up and perform heart surgery if he had not utilized the critical necessary tools? Many investors do exactly that when they buy and sell stocks without first consulting stock charts.” “Charts can tell you when a stock is not acting right and should be sold.” Successful Investor Foreword: “You also have to acquaint yourself with charts—an invaluable tool that most professionals wouldn’t do without but that amateurs then to dismiss as complicated or irrelevant. don’t worry. a picture in the form of a stock chart is worth a lot more. they say. or the stock market in general.” Successful Investor Foreword: ***“If you’re not familiar with stock charts. But to the successful investor.Charts: Pg 3: “You also acquaint yourself with charts. as well as the general market. makes all the difference. But given a little time.” Successful Investor Foreword: . or think they’re too technical.

(It always pays to start exactly right and not be late. And the most successful ones would no more buy or sell a stock before looking at its chart than a doctor would treat you without looking at the images he or she has to work with. the stock has its greatest chance of moving even higher based on its current price and historical price and volume activity. would feel confident in making a diagnosis of your physical condition without that x-rays or EKG or MRI.” 24 Essential Pg 45: “The pivot point.” Successful Investor Foreword: “No doctor.” 24 Essential Pg 45: “The objective is not to buy at the cheapest price when the probability of the stock having a huge move may be only so-so. Don’t chase it up more than 5% past its pivot.) Your risk of being shaken out on a normal price correction will substantially increase. But you’ll find that. with a little effort. The objective is to buy at exactly the right time—the time when the chances are greatest the stock will succeed and move up significantly. understanding the patterns that charts sketch out will dramatically improve your future investment results.” 24 Essential Pg 45: “This means that at this point.“You might not take to charts with the same alacrity.” 24 Essential Pg 55: “You want to buy a stock exactly at its pivot point as it breaks out of a sound pattern. for example. usually at the end of a sound basing area when the stock breaks out into new high ground.” Earnings: Pg 152: “Explosive earnings have accompanied big stocks moves throughout the stock market’s great history.” . Professionals in the word of investing use charts the same way. you will be buying more extended in price. is the point of least resistance. If you do.

It’s the powerful combination of these two critical factors.” Pg 166: “Primary consideration should be given to whether the rate of change in earnings is substantially increasing or decreasing. EPS rank should be invaluable for screening the true leaders from the poorly managed.” Pg 165: “Older and larger organizations are usually characterized by slower growth. and lackluster laggards in today's emerging age of tougher worldwide competition.” 24 Essential Pg 19: “I’m not interested in promises that losses or mediocre earnings will improve in the future.” Sales: Pg 158: .” First Edition pg 171: “Since earning power and earnings growth are the most basic measures of a firm's success. that creates a super stock. you’ll instantly see the relationship between booming profits and booming stocks.“If you look down a list of the market’s biggest winners year-in and year-out.” “A standout stock needs both a sound growth record in recent years and a strong current earnings record in the last several quarters.” Pg 170: “Concentrate on stocks with proven records of significant earnings growth in each of the last three years plus strong recent quarterly improvements.” “There is absolutely no good reason for a stock to go anywhere in a big. The vast majority of our successful historical models all had strong. and many of them should be avoided. Don’t accept anything less. accelerating earnings before their huge price increases began. or at least one that has a higher chance for true success. rather than one or the other. sustainable way if its current earnings are poor. deficient.

profit margins.” 24 Essential pg 24: “You’re looking for strong increases in quarterly sales and earnings compared to the same quarter the year before. This becomes obvious when you see what really great companies looked like before they launched price increase of 200% to 1000% or more.” 24 Essential pg 24: “We’ve found that strong sales and earnings were among the most important characteristics of winning stocks.” 24 Essential pg 19: “I also prefer to select companies that are #1 in their particular fields in terms of recent sales and earnings growth.“Strong and improving earnings should always be supported by sales growth of at least 25% for the latest quarter or at least acceleration in the rate of sales percentage improvement over the last three quarters.” ROEs Pg 162: “Our studies show nearly all the greatest growth stocks of the past 50 years had ROEs of at least 17%” “This shows how efficiently a company uses its money. research and development. You don’t want to get impatient and sell your stock if it shows this type of acceleration.” “Companies can inflate earnings for a few quarters by reducing costs or spending less on advertising. Stick to your position.” 24 Essential pg 19: “Sales should either be accelerating in the last few quarters or be up 25% or more from the same quarter one year earlier.” Pg 158: “Take particular note if the growth of both sales and earnings has accelerated for the last three quarters. and return on equity. and other constructive activities. thereby helping to separate well-managed firms from those that are poorly managed” . earnings growth must be supported by higher sales.” “To be sustainable.

” “To say that a security is “undervalued” because it’s selling at a low P/E or because it’s in the low end of its historical P/E range can be nonsense. and the direction is down.” PE Ratios Not Important Pg 166: “Our ongoing analysis of the most successful stocks from 1880 to present shows that. dividends.24 Essential Pg 19: “Return on equity (ROE). contrary to most investors’ beliefs.” Market Direction Pg 199: “If you’re wrong about the direction of the general market.” New Products Pg 172: “The way a company can achieve enormous success. price and volume action. thereby enjoying large gains in its stock price. and if the company is the number 1 profit leader in its field. or PE ratio—which for the last 50 years have had little predictive value in spotting the world’s most successful companies—and focus instead on more important proven factors such as profit growth. is by introducing new products into the marketplace. three out of four stocks will plummet along with the market averages. is an indicator of financial performance. and you will certainly lose money big time.” Successful Investor Foreword: ***“You pay far less attention to a company’s book value. as many people did in 2000 and again in 2008. P/E ratios were not a relevant factor in price movement and had very little to do with whether a stock should be bought or sold.” . Most of the big winners in our study had ROEs of 20% or more. It measures how efficient a company is with its money.

The market’s going to do whatever it’s going to do. who you are and what you think mean nothing.” Pg 219: “You’re better off staying on the sidelines in cash until a new bull market really starts.” Successful Investor Foreword: .” Successful Investor Foreword: “In the market.“Don’t ever let anyone tell you that you can’t time the market. Repeat: nothing.” Successful Investor Foreword: “The market is made up of millions of people acting almost 100 percent on human emotion and personal opinion. you’ll be plagued by results that are mediocre at best.” Successful Investor Foreword: “The only law the stock market obeys is the law of supply and demand. It doesn’t pay to be out of phase with the market.” Pg 208: “There are really only two things you can do when a new bear market begins: sell and retreat or go short. sit in front of a fishbowl and look at fish. what we think.” “Learning when it’s wise to raise cash is very important for you … so study and learn how to successfully use this technique for your advantage. or how we feel.” Successful Investor Foreword: “Until you as an investor.” Pg 234: “You need to stay in gear with the market. And—especially when it comes to the hopes and fears and pride and ego that drive so many investment decisions—human nature is pretty much the same now as it was in 1929 or 1636. And arguing with it can only cost you money.” Pg 202: “If you want to learn anything about fish.” Successful Investor Foreword: “The stock market doesn’t care who we as individuals are. It is crowd psychology on daily display. you must observe and study the major indexes carefully. If you want to learn about the market. come to grips with this reality and learn to move with the market rather than against it.

it’s essential that you buy the better stocks that mutual funds are buying and that you sell or avoid the ones that may be selling on a heavy basis. hopes and beliefs about the stock market are usually wrong and often dangerous. and seemingly bent on confounding the majority at every turn.” Successful Investor Foreword: “Personal opinions. Facts and markets. They are simply so big the water rises and splashes all over the place. are seldom wrong. oblivious to common wisdom.“The stock market is a beast like no other: indifferent to human desires. feelings.” Industry Groups: Pg 323: “The majority of the leading stocks are usually in leading industries. The law of supply and demand works better than all the opinions of all the analysts on Wall Street or off. on the other hand. Thus.” “Roughly half of a stock’s move is driven by the strength of its respective group. Our ratings enable you to easily track the institutional elephants.” Pg 324: .” Pg 194: “It’s always best to buy stocks showing strong earnings and sales and an increasing number of institutional owners over several recent quarters. maddeningly contrary.” A/D Rating: Pg 193: “Professional investors wield a huge amount of influence over a stock’s price.” 24 Essential Pg 38: ***“Funds are just like elephants jumping into a bathtub.

most great investors I know (Warren Buffett. concentrate on the top 20 groups and avoid the bottom 20.” “IBD’s main stock tables include the stock’s Industry Group Relative Strength Rating on an A to E scale with A being highest. In fact.“It’s important that you be able to recognize what industry group within the sector is acting the very best.” 24 Essential pg 34: “It’s clear that stocks tend to move in groups or sectors.” 24 Essential pg 31: “If you can’t find any other stocks in the group or. for starters) are technophobes. as a group.” Pg 339: “Of the most successful stocks. I always like to see at least one other stock in the same group that is also showing strength.” Peter Lynch: Lynch Pg 11: My experience shows you don’t have to be trendy to succeed as an investor. and I recommend avoiding the bottom 20%. . When I buy a stock. A and B rated stocks are preferred.” 24 Essential pg 35: “The top 20% of the 197 industry groups are usually best. They don’t own what they don’t understand.” “To increase your odds of finding a truly outstanding stock in an outstanding industry. an industry is underperforming. nearly two out of three were part of group advances. since this knowledge can mean the difference between superior and mediocre results.” 24 Essential pg 92: “You will have a better chance of succeeding if you stick to stock purchases among leading groups and sectors. perhaps you may want to rethink your selection. It usually pays to buy in a leading industry group.

” “Buying a company with mediocre prospects just because the stock is cheap is a losing technique. you must consider both fundamental information about the strength.” Lynch Pg 32: “Ignore the hot tips. than the average expert.” 24 Essential Lessons: 24 Essential Pg 18: “Rather than limiting yourself. you lose just as much money whether you bought it at $50. and soundness of the company and its products and the technical side of how a stock is performing in the marketplace. the recommendations from brokerage houses. and long before Wall Street discovers them. and the latest can’t miss suggestion from your favorite newsletter.” “Don’t become so attached to a winner that complacency sets in and you stop monitoring the story. $25. quality. $5. if not better.” ***“Just because a company is doing poorly doesn’t mean it can’t do worse.” Lynch Pg 32: ***“If you stay half-alert.Lynch Pg 31: ***“Any normal person using the customary three percent of the brain. can pick stocks just as well.” ***“You won’t improve results by pulling out the flowers and watering the weeds.” “If a stock goes to zero.” “A stock does not know that you own it.” Lynch pg 285-86: “You can make serious money by compounding a series of 20-30 percent gains in stalwarts. . you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall. or $2— everything your invested.” “Selling an outstanding fast grower because its stock seems slightly overpriced is a losing technique.

The top institutions usually do thorough fundamental analysis before they buy large stock positions. Companies that are #1 in their fields are the real market leaders. and why stocks should be sold.” “I have never subscribed to market letters and never made any money listening to analysts or economists. you’ve got to buy the very best. studying the few successful investors or groups you know in the market.” 24 Essential Pg 24: ***“To make big money. and other institutional investors have a bought a stock can serve as your personal research department.” 24 Essential Pg 24: ***“You’re objective is not to be right all the time.” “You can learn more about the market by reading a couple of good books…. have increased sales and have preferably both strong profit margins and a high return on equity.” 24 Essential Pg 19: “Knowing how many of the better-performing mutual funds. when.” How to Make Money Selling Stocks Short How to Make Money Selling Stocks Shorts Foreword: ***“I don’t see how anyone can really do well in the market and protect assets if they don’t learn how. banks.” 24 Essential Pg 19: “You should understand what the company you’re investing in makes or does. how can she be sure that the very stocks she is buying aren’t actually giving off indications that they should be sold?” “Buying without the ability to sell is like a football team that is all offense with no defense. To. win you must understand and execute both. and plotting and analyzing on charts all of your own past decisions.” .24 Essential Pg 18: “Buy only stocks that show consistent earnings improvement. It’s to make big money when you are right and to get out early when you appear to be wrong.” “If an investor doesn’t know how to recognize when a stock has topped and should be sold.

” Successful Investor Foreword: “You learn to always sell stocks quickly when you have a small loss rather than waiting and hoping they’ll come back. ***If you miss the first base. what we think. and seemingly bent on confounding the majority at every turn. Don’t be intimidated — you can learn how to take advantage of the many innovative new leaders in every new cycle. Next. and in general market indexes.The Successful Investor Successful Investor Foreword: “Lack of sell rules and the ability to spot major selling indicators in a stock’s price and trading volume action. do a price and volume check of each week within the stock’s base to help you conclude if the stock is showing sound accumulation or too many price and volume defects. sales and return on equity. hopes and beliefs about the stock market are usually wrong and often dangerous. on the other hand. do a fundamental analysis checking for excellent earnings. are seldom wrong. constitute one key reason so many people lost so much more than they should have. maddeningly contrary.” Bill in IBD: ***Too many investors use their personal opinions rather than using rules for timing the general market and individual stocks. or how we feel. Facts and markets. ***The law of supply and demand works better than all the opinions of all the analysts on Wall Street or off. pay attention. feelings. Leaders can build a later base and opportunity.” Successful Investor Foreword: “Personal opinions. For the best prospects.” Successful Investor Foreword: “The stock market is a beast like no other: indifferent to human desires. oblivious to common wisdom. .” Successful Investor Foreword: “The stock market doesn’t care who we as individuals are.” Successful Investor Foreword: ***“Highly successful investing has nothing to do with your emotions or personal opinions.

” “You can’t go by opinions or how you feel. Maybe it’s time you get determined to always recognize and never miss another base-on-base or cup pattern in the future. You need to have and follow sound. Isn’t that worth it?” Diversification: Broad diversification is a hedge for lack of knowledge.***“The market isn’t easy – it doesn’t wait until everyone is ready. You can do it. prepared and certain.” “Learning to accurately read charts can directly lead to more success in the stock market. it takes time. . It takes time and study but.” “It’s not easy. can have life-changing effects on your financial future. History constantly repeats stock patterns in the market. but you can learn to do this if you have a strong desire and are determined.” ***“It’s wake-up time. proven rules. or ignorance. The best results are usually achieved through concentration: by putting your eggs in just a few baskets that you know a great deal about and continuing to watch those baskets very carefully. if done properly.