Lesson 1. What Every Investor Should Know Going In
• Cut your losses early. It’s like buying fire insurance.
• Always cut your losses at 8% below your purchase price.
Always sell your worst performing stock first, not your best-performing stock.
Lesson 2. Getting Started: There’s no time like the present!
Lesson 3. Follow a system rather than your emotions
Lesson 4. Fundamental analysis or technical analysis?
• Volume, or the number of shares of stock trades per day or per week is a key to interpreting supply and demand correctly. It is a signal that big institutions may be buying or selling your stock, which could impact price positively or negatively. The best institutional investors use both fundamental and technical analysis in their purchase decisions.
• Most of the big winners have Return on Equity ROE (an indicator of financial performance) of 20% or more. Most have management ownership or the management owns a percentage of the stock.
Lesson 5. First among fundamentals: Earnings and Sales
• Rule of thumb: Look for stocks with annual earnings growth rates of 30% or more and ROE’s of 17% or higher.
• Strong sales and earnings are among the most important characteristics of winning stocks.
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