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Stock Concepts: or "What seems to Work"

More will be added at a later date. Any immediate questions can be answered by doing a basic web
search. Besides, you might find something interesting yourself.

There are different theories on how to make money on Wall Street. I have found that most systems
fall into the following categories:
Faster - Momentum
Cheaper - Value
Better - Growth
More - Fed policy and money (liquidity)
Time - Cycles

Ask Yourself: What factors influence my stock market decisions? Are they relevant, or extraneous
and wasteful? What are you in the market for? Don’t automatically say “Money!!” I have seen way
too many times that people sometimes want something else from “Mr. Market”, excitement, pride,
even suffering.

Buy Low, Sell High? Only if you believe in Value theory. Otherwise use Buy High, Sell Higher using
Momentum theory.

What (seems to) Work:

Buy Low and Sell High using Value Theory


V1. National Association of Investment Clubs (NAIC) using the Stock Selection Guide (SSG)
V2. Use Invest% theory found in the Moneypaper. See Below.
V3. Stock Tactics System & Wiest System- The lower the cost the better. E-mail me on these.

Buy High, Sell Higher using Momentum Theory:


M1. Adam Theory from Welles Wilder - Price Projection and Money Management
M2. Telephone Switch Newsletter from Dick Fabian - Buy above crossing of Moving Averages
M3. High-Low Analysis - Buy above prior high, Sell below prior low

Timing using Growth & Momentum Theory:


GM1. Investor’s Business Daily - CANSLIM Theory
GM2. Nicholas Darvas - Techno-Fundamentalist, Box Theory
(both of these use some form of technical analysis, which is somewhat useful by itself, much more
useful with other ideas.)

Timing using Cycle Theory:


C1. Seasonality-Monthly, Calendar Quarters and Presidential Cycle. Yes there is a time and a
season for everything, including investing. I learned this from Market Logic and Yale Hirsch.

Fed policy and money (liquidity) Interest Rate (Yield Curve) Analysis. High interest rates hurt the
market as people seek alternate investments. Remember, there are many places to put your money.
There is a lot of competition out there. Bonds might be an alternative.

Rising interest rates and rising inflation hurt stocks. Lower earnings (or profits, that dirty word) hur
stocks also. The opposite of these three help stocks.

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Don’t Mix Methods. Sell your positions for the same reason you bought it, but whatever you do,
don’t mix methods.

If you buy with Value in mind, sell with Value in mind. Do not decide that, all of a sudden,
Momentum will work now. The only exception that I can think of is to use Cycles of Time to help
better time your entrance and exit.

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When to use market orders. This depends if the market is in an uptrend or downtrend, and if you are
buying or selling
(Mkt is a Market order, buy or sell immediately; GTC is a Good-Till-Cancelled order):

Buy Sell
Mkt GTC in Uptrend
GTC Mkt in Downtrend
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Use Invest% to buy low and sell high. That’s what we try to do in investing, right? Only sometimes,
see Value theory above.

(YH - Today) divided by (YH - YL) = Invest%

where YH=Yearly high, YL=Yearly low, Today=today’s price

Invest% will give you a “factor” to use to help you determine how much to invest that month. This
works best with some kind of systematic investment program. It accentuates Dollar Cost Averaging,
since you buy more (in absolute dollar terms) as the price goes down, and buy less (in absolute dollar
terms) as the price goes up. Since you are varying your purchase amounts you need to have a
cushion, because some months you will buy more.

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More will be added at a later date. Any immediate questions can be answered by doing a basic web
search. Besides, you might find something interesting yourself.

Marketing Concepts
Faster - Time
Cheaper - Money
Better - Quality
More - Quantity
Service/Discipline