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Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell

Book Description

“The author introduces an investing methodology with proven results and easily applied unequivocal decision making. Particularly impressive is the way he includes a selling discipline, not just a buying discipline. This book is a must for any concerned investor.”

Richard Arms, Analyst, Author, and Inventor of The Arms Index

“This is one of the best new investing books of the decade: succinct, practical, and timeless. Built on a foundation of 40 years of market wisdom, it combines technical analysis and portfolio construction that is supported by excellent research. It should be required reading for everyone from new investors to the most sophisticated hedge fund managers.”

Linda Raschke, President, LBRGroup, Inc.

“The author is an award winning Technical Analyst. In this book, he covers the basic principles, definitions, safeguards, pitfalls, and risks of investing. Believing in active management, he recognizes the benefits of multiple tools (fundamental and technical) and disciplines there-on, to construct a portfolio methodology with guidelines for both buying and selling, for maximum gain. This is a valuable book for any serious investor.”

Louise Yamada, Managing Director, Louise Yamada Technical Research Advisors, LLC.

“In this book, Charles Kirkpatrick demonstrates just how powerful a tool relative strength is, deftly combining technical and fundamental analysis to produce a superior long-term approach. This isn’t just theory, but the real-time work of a practitioner with an outstanding track record. For many years a small group of knowledgeable investors has known about this work, now you can too.”

John Bollinger, CFA, CMT, President, Bollinger Capital Management

“The author presents a clearly written, time-tested formula for investor independence and success through applying relative price strength for stock selection and portfolio construction.”

Hank Pruden, Golden Gate University

Over the past 25 years, Charles D. Kirkpatrick’s exclusive stock-picking technique has outperformed the S&P 500’s performance by a whopping 7.7 times. That’s right: If you’d invested $10,000 in the S&P 500, you’d have $130,000 now...but if you’d followed Kirkpatrick’s published picks, you’d have $1,000,000! If that’s not amazing enough, Kirkpatrick’s system is remarkably easy to use. In this book, he teaches you all you need to put it to work in your portfolio!

Kirkpatrick reveals why an active strategy based on relative stock rankings is the surest route to profit, and how just a few pieces of publicly available information enable you to create rankings that virtually guarantee exceptional performance. You’ll learn how to use his techniques to organize stocks into a portfolio that maximizes returns while reducing risk...uncover trigger points that tell you when to buy and sell...and systematically protect yourself against bad stocks and bad markets.

  • Why the conventional wisdom about investing is flat-out wrong
    What’s wrong with diversification, “random walks,” and the efficient markets hypothesis

  • Don’t even try to predict the markets: you don’t have to!
    Discover what the markets are actually doing: then react fast, with discipline

  • Invest the intelligent way: with “relatives”
    Measure what really matters: a stock’s relative strength and growth compared with the rest

  • Start using the market’s reliable investment triggers
    Recognize what to buy, what to sell, and when to make your moves

  • Mitigate the risks associated with broad market declines
    Intelligently decide when to move assets into cash

  • Table of Contents

    1. Copyright
      1. Dedication
    2. Praise for Invest by Knowing What Stocks to Buy and What Stocks to Sell
    3. Acknowledgments
    4. About the Author
    5. Introduction
    6. 1. Investing Today
      1. Investment Management
      2. Investment Management Incentive
        1. Mutual Funds and Professional Management
        2. Hedge Funds
        3. ETFs (Exchange Traded Fund)
      3. What Do You Do?
        1. Why the Stock Market?
      4. Summary
    7. 2. Beliefs and Biases
      1. The Markets
      2. My Emotional Experience
        1. Impatience
        2. Fear of Being Wrong
        3. Looking for Perfection
        4. Lack of Discipline
      3. Summary
    8. 3. Investment Risk
      1. Individual Stock Risk
      2. Randomness
      3. Diversification
      4. Law of Percentages
      5. Drawdown
      6. Market Risk
      7. Summary
    9. 4. Conventional Analysis
      1. Fundamental Versus Technical Methods
        1. Fundamental Method
        2. Technical Analysis
        3. EMH and Other Useless Theories
      2. Summary
    10. 5. Prediction Versus Reaction
      1. Economists
      2. Gurus and “Experts”
      3. Mutual Funds
      4. Security Analysts
      5. Reaction Technique
      6. Summary
    11. 6. Meeting the Relatives
      1. Value
      2. Growth
      3. Price Strength
      4. The Evidence
      5. Summary
    12. 7. Value Selection
      1. Performance Three Months Ahead
      2. Performance Six Months Ahead
      3. Performance Twelve Months Ahead
      4. Advancing and Declining Background Market
      5. Relative Price-to-Sales Percentile During a Declining Market After Three Months
      6. Summary
    13. 8. Relative Reported Earnings Growth Selection
      1. Summary
    14. 9. Relative Price Strength Selection
      1. Relative Strength Calculations
      2. Summary
    15. 10. Putting It Together
      1. Growth Model
        1. Stop Orders
        2. Portfolio Construction
      2. Value Model
        1. Change in Capital Risk Variables
      3. Summary of Growth and Value List Triggers
        1. Growth List
        2. Value List
      4. New Model (Called the “Bargain List”)
        1. Price-to-Sales
        2. Reported Earnings Growth
        3. Relative Price Strength
        4. Bargain List Triggers
      5. Summary
    16. 11. Selecting and Deleting Stocks
      1. Buying
      2. Selling
      3. Sources of Relative Information
      4. Other Concerns
      5. How to Act
      6. Summary
    17. 12. Creating a Portfolio of Stocks
      1. Maximum Drawdown
      2. Simple but Practical Methods of Creating a Portfolio
        1. Three Methods of Creating a Portfolio
        2. Keeping Fully Invested
        3. Adjusting for Market Capital Risk Using a Maximum Number of Stocks
        4. Adjusting for Market Capital Risk Using Simple Moving Averages
        5. Maximum Drawdowns
      3. Summary
      4. Conclusion
    18. Investment Procedure Example
      1. Finding Data, Calculating Data, and Locating Sources
      2. The Hypothetical Value Model Portfolio
      3. Performance of Value Model
      4. Adding and Deleting Stocks
    19. References
    20. Financial Times Press