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Getting Started in Stock Analysis, Illustrated Edition

Book Description

Robust analysis shows a more complete picture of market behavior

Getting Started in Stock Analysis is an exciting visual guide to both technical and fundamental analysis for the private investor. Rather than addressing the benefits of fundamental or technical analysis, author and trader Michael C. Thomsett draws upon three decades' experience in the stock market to demonstrate why traders need to employ both. Readers will learn how both methods are different aspects of the same cause and effect within the market, and how exploiting one method at the expense of the other results in an incomplete picture of the true market behavior. Coverage includes a full explanation of the range of indicators necessary to create a working system of analysis that anyone can perform on their own, helping long- and short-term investors alike improve selection and confirm investment decisions. Charts of actual listed companies demonstrate how these techniques are applied in a real trading environment.

Investors and traders are constantly seeking the "magic bullet" for identifying profitable trades and timing both entry and exit. Since the 1940s, the average holding period has fallen from eight years to eight weeks - making fundamental and technical analysis more challenging. This book describes how combining these approaches can compensate for the modern market environment to produce a more accurate - and profitable - analysis.

  • Choose better stocks and other securities

  • Improve entry and exit while managing risk

  • Develop more robust analysis skills

  • Blend fundamental and technical analysis techniques

  • The reduced cost of trading, ease of access via the Internet, and changes in the overall culture of the stock market have increased the pace and volume of trading more than ever before. In this environment, sharp analysis becomes ever more critical. Getting Started in Stock Analysis is the visual guide to more confident investing.

    Table of Contents

    1. Acknowledgments
    2. Element Key
    3. Introduction
      1. Note
    4. PART 1 FUNDAMENTAL ANALYSIS
      1. CHAPTER 1 FINANCIAL STATEMENTS IN OVERVIEW
        1. The GAAP System
        2. Auditing of the Books: Purpose and Process
        3. Stockholder Reliance on the Audit
        4. Methods of Hiding or Distorting Data
        5. The Regulatory Environment
        6. Types of Financial Statements
        7. Annual Reports
        8. Analysis: The Importance of Trends
        9. Simplifying the Financial Statement
        10. Notes
      2. CHAPTER 2 HOW RELIABLE ARE THE FINANCIAL REPORTS?
        1. Publicly Traded Company Reporting
        2. The Need for Financial Reporting
        3. The Value and Purpose of Fundamental Analysis
        4. Long-Term Trends and Ratios
        5. Fundamental Risks
        6. Contrarian Investing from a Fundamental Perspective
        7. Is Buy and Hold Dead?
      3. CHAPTER 3 BALANCE SHEET RATIOS—TESTING WORKING CAPITAL
        1. The Balance Sheet in Review
        2. Flaws in the Balance Sheet
        3. The Importance of Footnotes
        4. The Key Balance Sheet Ratios
      4. CHAPTER 4 INCOME STATEMENT RATIOS—TRENDS AND PROFITS
        1. The Income Statement in Review
        2. Flaws in the Income Statement
        3. The Importance of Footnotes and Management’s Commentary
        4. The Key Income Statement Ratios
      5. CHAPTER 5 FIVE KEY TRENDS EVERY INVESTOR NEEDS
        1. Trend #1: The Price/Earnings Ratio (P/E)
        2. Trend #2: Dividend Yield and Trend #3: Dividend History
        3. Trend #4: Revenue and Earnings
        4. Trend #5: Debt Ratio
      6. CHAPTER 6 THE ANNUAL REPORT AND WHAT IT REVEALS
        1. Sections of the Annual Report
        2. The Annual Report as a Marketing Document
        3. How to Use the Annual Report
        4. Notes
      7. CHAPTER 7 FUNDAMENTALS NOT ON THE STATEMENT
        1. Dividend Yield, Payout Ratio, and History
        2. Market Cap
        3. Contingent Liabilities and Other Liabilities
        4. Market Value of Long-Term Assets
        5. Insider Trading
        6. The Value of Good Management
        7. Notes
    5. PART 2 TECHNICAL ANALYSIS
      1. CHAPTER 8 THEORIES AND WHAT THEY MEAN
        1. The Dow Theory
        2. Efficient Market Hypothesis (EMH)
        3. Random Walk Hypothesis (RWH)
        4. Other Theories
        5. Notes
      2. CHAPTER 9 CHARTING AND ITS VALUE
        1. Types of Charts
        2. Scaling of Chart Values
        3. Candlestick Basics
        4. Single-Session Indicators
        5. Two-Session Indicators
        6. Three-Session Indicators
        7. Reversal and Continuation
        8. Notes
      3. CHAPTER 10 TRENDS AND HOW TO STUDY THEM
        1. Trends as Indicators of Risk
        2. Trendlines
        3. Channel Lines
        4. Triangles and Wedges
      4. CHAPTER 11 MOVING AVERAGES AND THEIR VALUE
        1. Simple and Exponential Averages
        2. Duration of the Moving Average (MA)
        3. Double Crossover between MA Lines
        4. Price Crossover Signals
        5. Support and Resistance and MA Trends
        6. Bollinger Bands for Short-Term Trend Monitoring
      5. CHAPTER 12 PRICE INDICATORS
        1. Support and Resistance
        2. Double Tops and Bottoms
        3. Head and Shoulders
        4. Flags and Pennants
      6. CHAPTER 13 VOLUME INDICATORS
        1. Accumulation/Distribution (A/D)
        2. Chaikin Money Flow (CMF)
        3. Money Flow Index (MFI)
        4. On-Balance Volume (OBV)
      7. CHAPTER 14 MOMENTUM OSCILLATORS
        1. The Nature of Momentum
        2. Relative Strength Index (RSI)
        3. Moving Average Convergence Divergence (MACD)
        4. Stochastic Oscillator
      8. CHAPTER 15 CONFIRMATION, THE KEY TO TIMING
        1. What Confirmation is Not
        2. Proximity and Strength of the Signal
        3. Setting Rules for Yourself
    6. Glossary
    7. About the Author
    8. Index
    9. End User License Agreement