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How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition Paperback – June 8, 2009
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Let me explain why...
This book is about growth investing and growth investing only. The reason I thought the book is horrible is because the author go against some of the already proven techiniches and consensus already stabilished not only in Wall Street but for great legends like Benjamin Graham, Warren Buffett, John J. Murphy, Bulkowski, Nison and others.
For instance, he desregards the use of P/E or Discounted Cash Flow as a good metrics, giving exemples about the high P/E ratios found on Microsoft and other Tech Growth stocks and how the investor would have missed those stocks.
But he does not tell the story about the dot com bubble and how this same over valued P/E stocks went from a fortune to nothing, capitalizing on earning growth that even did not existed, more like a future promisse.
He gives other example about Bank of America with low P/E in 2008. For God Sakes a global financial crises and meltdown of stock market should not be a parameter for nothing and pro investor or not, who earned money in that year?
Other point the author dismiss based on his research is about Technical Analysis and some Patterns, saying almost all patterns have a low rate of success. The only pattern that he considers good is cup and handle because he was the first person to spot it and write about it, I guess...
On the final chapters the author have some chapters with titles like When to sell or how to time markets and stuff like that, but he does not give clear clues and techniques and pictures of how to do it and how to do it, he just talk in a shallow way.
He dislikes the idea of buying good and stabilished companys like Coca-Cola and Gillete just because the are too big to generate good profits or because he judges their management team old fellow with no interest to innovate or step out of the box. Also deslikes the idea of buy and hold good companies like Warren Buffett does.
In resume, is almost like he is saying "Go Big or Go Home!" and instigating the new investor to take risks with this unproven enterprises...
Like I said, this is a good for those interested in buy and look for growth stocks and maybe in this matter it can be a useful book, but to dismiss all the common sense and already proven techniques ranging from value investing and technical analysis for me would be madness
This is because IBD (the newspaper/service accompanying this strategy) does half the work for you. The book will tell you to look for companies with a certain amount of earnings growth by quarter, for example, and that sounds like a lot of work--and normally, it would be. But if you pay the $10 per month, or whatever it is, for the paper, all of that stuff is done for you. The data is available for any stock in the market, and you're given a list of the top 50 stocks that meet the criteria listed in the book.
But as I said, that's only half the work. Knowing which stocks to buy is easy (thanks to this strategy), but knowing when to buy them and when to sell them is the hard part. The book goes into detail on that. It involves looking for certain patterns in the price charts (also available through their service), and then buying if the price goes above a certain level. Then there are also rules on when to sell.
It's a rules-based system, which is good because it gives you a set of criteria by which to buy and sell stocks, but there is room for flexibility (depending on your abilities as a technical analyst and/or your knowledge of a particular company) which is going to make or break you as a stock trader.
I should finish this review, though, by saying that most traders lose money in stocks. Unless you're so obsessed with stocks that you're willing to put in thousands of hours (just like any highly competitive skill) before you are successful, I'd recommend just buying a mutual fund instead. It's a lot less hassle, and unless you become an elite trader, your returns will likely be comparable over a long enough period of time.
If there is any negative that I have to say about this book, it's that it says nothing about what I believe is the most difficult part about trading. The psychological aspect. I would reference Mark Douglas for that.
So far, in only 3 months of investing with his strategy, I have made 15% returns on my investments. Before I read this, I had to wait at least a year or two before making that kind of money. However, he does solicit his website throughout the book. At first, I was skeptical of someone trying to sell financial advice (everyone seems to solicit you for market advice nowadays), but I decided to give his website a try. Ends up, they give you a month trial for free, and it costs $30 per month after the trial. With the amount of money I have made from this book, the $30 a month is a drop in the bucket of my profits.
To provide concrete examples, his website told me to look for Winnebago (WGO) in August-September 2017, YY Inc.'s (YY) incredible 25% shoot up after their amazing quarter in November 2017, and Square's (SQ) ungodly skyrocket in November 2017. Those are but some of the success stories I would never have found had I simply read he book and tried to do the analysis that the website provides for you. I strongly recommend reading the book and paying the monthly membership for the website. I have not regretted it at all.
Top international reviews
However, it gets 1 star from me because while the investment content is very good and I fully understand patriotism, the America this, America that and constant pot shots at other countries does not belong in an investment book and because of that the book gets 1 star from me...
- Looks to me like the author is using it purely for promoting his Investor's Business Daily and Investors.com, which might be understandable, but thats not what the title of the book states. I had to skip chapter 16 for that reason.
- also, all those nearly 100 pages of charts at the start of the book are very hard to read. I also believe they will not have any sense for a newbie investor/trader. It took me 6 months of a full time daily trading to learn to recognize those chart patterns. So, I am not sure how the author expects a new investor/trader to learn them from just looking through those pages in the book? I feel that those pages are totally irrelevant in this book.
-to add up, as I have mentioned earlier on this is not the first book I read on investing. But it ended up to be the first book where I found that the author expressing his strong political views and opinions throughout the whole book. He constantly mentions the USSR as the aggressor and adds up heavily on the US politics in chapter 17 expressing his political views throughout it. I have no problem to talk politics. We all have our opinions and sometimes they are very strong. But in this case I think the author crossed the line and definitely chose a wrong platform to express his political views. And I am saying that because I read a few books on investing already written by famous Peter Lynch, W. Baffett and T. Bulkowski. So, I can compare.
Needless to say, I have to be more careful now on choosing what I am buying next. Apart from a several good tips, this one for me turned out to be a complete disappointment.
Full of sound advice and logic.
A must read for any serious investor, trader.
Sure you can apply the charting techniques to UK stocks. Need to be disciplined with stop losses which I am not!!!
Very useful in Indian markets which are more growth oriented.
One complaint about the book - they could have used better paper, looks like printed on home inkjet printer.