How to Make Money in Stocks by William J. O'Neil
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Do you prefer stockfetcher to stockcharts?
Yes, I prefer StockFetcher to StockCharts. For actual trading, at the moment I use Nadex and three different MetaTrader accounts with various brokers. To view charts not offered by MetaTrader, I use TC2000 with a delayed feed (because it's free) or Investing.com.
I'm no longer trading stocks however, having switched to Forex in 2010 or 2011. But, I just opened an account with Charles Schwab last month, so if I return to trading stocks in 2021, I will be using one of the platforms they offer.
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Summary #3: Innovative Companies
Study the stock market from 1880 onward and you'll see that companies which introduced revolutionary technologies also enjoyed rocketing stock prices. Great returns on the stock market and innovation go hand in hand. The key message here is that innovative companies can make for a good return, but you need to know when to invest in them.
For example Northern Pacific’s stock (the first transcontinental railroad—from 1900 onward) shot up 4,000 percent in only two years! Between 1913 and 1914, General Motors' new automobiles fueled a stock rise of 1,368 percent. And Cisco Systems, which created networking equipment that allowed companies to link up local-area computer networks, saw its stock climb an astonishing 75,000 percent from 1990 to 2000.
The USA continues to draw innovators from all over the world. So, if you missed out on Apple or Microsoft, don't fret. There'll be others. You just need to put in the hard work to spot them in time. So, when is that?
Well, a really great innovative company will often continue to grow exponentially, way beyond what's predicted. So, don't be afraid of buying when a stock seems to be at a high point already. In fact, a study by Investor's Business Daily found that stocks which continue to hit new highs over bull market periods, keep hitting them. And stocks that continue to hit new lows keep hitting them as well.
Nonetheless, as mentioned earlier, the right time to buy a stock is still when it has consolidated its base and is about to break out, with the "Cup with Handle" being an almost surefire sign of this. So, the lesson here is to look for great, pioneering companies. and do your best to invest in them at the right time.
Study the stock market from 1880 onward and you'll see that companies which introduced revolutionary technologies also enjoyed rocketing stock prices. Great returns on the stock market and innovation go hand in hand. The key message here is that innovative companies can make for a good return, but you need to know when to invest in them.
For example Northern Pacific’s stock (the first transcontinental railroad—from 1900 onward) shot up 4,000 percent in only two years! Between 1913 and 1914, General Motors' new automobiles fueled a stock rise of 1,368 percent. And Cisco Systems, which created networking equipment that allowed companies to link up local-area computer networks, saw its stock climb an astonishing 75,000 percent from 1990 to 2000.
The USA continues to draw innovators from all over the world. So, if you missed out on Apple or Microsoft, don't fret. There'll be others. You just need to put in the hard work to spot them in time. So, when is that?
Well, a really great innovative company will often continue to grow exponentially, way beyond what's predicted. So, don't be afraid of buying when a stock seems to be at a high point already. In fact, a study by Investor's Business Daily found that stocks which continue to hit new highs over bull market periods, keep hitting them. And stocks that continue to hit new lows keep hitting them as well.
Nonetheless, as mentioned earlier, the right time to buy a stock is still when it has consolidated its base and is about to break out, with the "Cup with Handle" being an almost surefire sign of this. So, the lesson here is to look for great, pioneering companies. and do your best to invest in them at the right time.
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HE was one of the pioneers of buy hi/sell HIGHER/profit higher. Good points.
Good logic,because by definition a bull market makes higher highs/higher lows/higher closes...........................................................................................................................
HIS Investors Business Daily newspaper is about 777 x better than WSJ; but i like the WSJ candle charts. IBD uses a red/white/blue barchart, with 50 dma on it or 200day moving average[ His older charts were white/black + grey/harder to read]
Summary #4: Supply and demand is an important factor in stock picking.
The price of nearly everything is determined by supply and demand. So, when you buy things in your daily life, like toothpaste, cheese or stationary, the price depends on how much of each product is available and how many people want to buy it. The principle of supply and demand applies to the stock market as well.
Imagine that one company has issued 5 billion shares, and another has 50 million. To produce a stock rally in the one with 5 billion shares, an enormous amount of buying is required. But the smaller stock, with only 50 million, could shoot up much more quickly. The "supply" for the small stock is much less, so price movements would be much more dramatic.
But just as it could fly upward very quickly, a so-called small-cap stock could also crash just as dramatically. So while the rewards could be more spectacular, the downside is sometimes much larger. A company with many more issued shares is a less risky proposition. That's because a great deal of selling is needed before the price moves.
So the law of supply and demand dictates that a small company can yield more explosive results, and a big company might be a more reliable investment. But who owns these shares matters, too.
In big and small companies alike, it's a good sign if top management owns a significant percentage of company shares themselves. If they don't, they may not have a strong vested interest in the company's success, so the stock could be a liability in your portfolio. But if management does own at least 1 to 3 percent of a big business, and more in small companies, then the business will generally be a better investment.
Another factor to keep in mind is companies buying back their own stock. This is a good sign. It suggests that the company believes that improved earnings are on the horizon, and consequently, that their stock could soon be in high demand.
The price of nearly everything is determined by supply and demand. So, when you buy things in your daily life, like toothpaste, cheese or stationary, the price depends on how much of each product is available and how many people want to buy it. The principle of supply and demand applies to the stock market as well.
Imagine that one company has issued 5 billion shares, and another has 50 million. To produce a stock rally in the one with 5 billion shares, an enormous amount of buying is required. But the smaller stock, with only 50 million, could shoot up much more quickly. The "supply" for the small stock is much less, so price movements would be much more dramatic.
But just as it could fly upward very quickly, a so-called small-cap stock could also crash just as dramatically. So while the rewards could be more spectacular, the downside is sometimes much larger. A company with many more issued shares is a less risky proposition. That's because a great deal of selling is needed before the price moves.
So the law of supply and demand dictates that a small company can yield more explosive results, and a big company might be a more reliable investment. But who owns these shares matters, too.
In big and small companies alike, it's a good sign if top management owns a significant percentage of company shares themselves. If they don't, they may not have a strong vested interest in the company's success, so the stock could be a liability in your portfolio. But if management does own at least 1 to 3 percent of a big business, and more in small companies, then the business will generally be a better investment.
Another factor to keep in mind is companies buying back their own stock. This is a good sign. It suggests that the company believes that improved earnings are on the horizon, and consequently, that their stock could soon be in high demand.
Summary #5: You should buy industry leaders.
Many of us have favorite companies that make us feel good, and it's these companies in which we tend to invest. Think of companies like Coca-Cola or Nike, with well-loved products and a great, lasting brand. However, in a bull market, old favorites like these can sometimes be left in the dust by dynamic new leaders.
Consequently, as a general rule of thumb, you should buy the leading companies in their group. A leading company is not necessarily the largest or the most recognized brand name. They're the ones with:
Its always better to buy these dynamic companies over the sentimental old favorites. This was clear during the big bull market of 1979 and 1980. The most dynamic companies of the time, Wang Labs, Tandy, and Datapoint had up to seven-fold increases. At the same time, the grand old computing giants, like IBM and Burroughs, were pretty much static. Just because they'd been reliable over the years didn't mean that they could bring the dramatic returns of the leading companies.
You should always avoid the second-best or the copycat company. The leader will nearly always outperform these. But oftentimes, people invest in these second-best companies because they hope that some of the luster of the industry leader will rub off on it. Sadly, that's hardly ever the case.
As the industrialist Andrew Carnegie said: "The first man gets the oyster; the second, the shell." It's always the real innovators and entrepreneurs that drive the market. These are the companies in which you should look to invest.
Many of us have favorite companies that make us feel good, and it's these companies in which we tend to invest. Think of companies like Coca-Cola or Nike, with well-loved products and a great, lasting brand. However, in a bull market, old favorites like these can sometimes be left in the dust by dynamic new leaders.
Consequently, as a general rule of thumb, you should buy the leading companies in their group. A leading company is not necessarily the largest or the most recognized brand name. They're the ones with:
- The best quarterly and annual earnings growth
- The strongest sales growth
- The widest profit margins
- The highest return on equity
- A unique and innovative product which is driving these results
Its always better to buy these dynamic companies over the sentimental old favorites. This was clear during the big bull market of 1979 and 1980. The most dynamic companies of the time, Wang Labs, Tandy, and Datapoint had up to seven-fold increases. At the same time, the grand old computing giants, like IBM and Burroughs, were pretty much static. Just because they'd been reliable over the years didn't mean that they could bring the dramatic returns of the leading companies.
You should always avoid the second-best or the copycat company. The leader will nearly always outperform these. But oftentimes, people invest in these second-best companies because they hope that some of the luster of the industry leader will rub off on it. Sadly, that's hardly ever the case.
As the industrialist Andrew Carnegie said: "The first man gets the oyster; the second, the shell." It's always the real innovators and entrepreneurs that drive the market. These are the companies in which you should look to invest.
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I have a book on Andrew carnegie/the steel + library king!!!!! But frankly many businesses a re not like steel @ all.
Look @ all those hamburger joints that may not do as well as MCD. /but much more '' well than the shell'' /LOL .Great Post, expi...................................................................Many oysters/treasures in the market.