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

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

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About

Features

Covers one stock investing technique that has outperformed the S+P 500 by a factor of nearly 8 for 25 years!  

  • Discover objective triggers that tell you what and when to buy and sell specific stocks
  • The average investor, with this strategy, can beat the market and keep assets from being destroyed from bad stocks and bad markets.
  • Create simple portfolios that systematically improve returns and reduce both stock and capital loss risk.

Description

  • Copyright 2009
  • Dimensions: 5-3/8 X 8
  • Pages: 192
  • Edition: 1st
  • Book
  • ISBN-10: 0-13-243978-6
  • ISBN-13: 978-0-13-243978-7
  • eBook (Watermarked)
  • ISBN-10: 0-13-714158-0
  • ISBN-13: 978-0-13-714158-6

“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

Sample Content

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Table of Contents

Introduction 1

CHAPTER 1 Investing Today 3

    Investment Management 4

    Investment Management Incentive 5

    What Do You Do? 15

    Summary 18

CHAPTER 2 Beliefs and Biases 19

    The Markets 20

    My Emotional Experience 22

    Summary 25

CHAPTER 3 Investment Risk 27

    Individual Stock Risk 27

    Randomness 29

    Diversification 30

    Law of Percentages 31

    Drawdown 31

    Market Risk 33

    Summary 37

CHAPTER 4 Conventional Analysis 39

    Fundamental Versus Technical Methods 39

    Summary 46

CHAPTER 5 Prediction Versus Reaction 47

    Economists 47

    Gurus and “Experts” 49

    Mutual Funds 50

    Security Analysts 50

    Reaction Technique 53

    Summary 55

CHAPTER 6 Meeting the Relatives 57

    Value 58

    Growth 61

    Price Strength 63

    The Evidence 67

    Summary 68

CHAPTER 7 Value Selection 69

    Performance Three Months Ahead 73

    Performance Six Months Ahead 74

    Performance Twelve Months Ahead 77

    Advancing and Declining Background Market 78

    Relative Price-to-Sales Percentile During a

    Declining Market After Three Months 81

    Summary 83

CHAPTER 8 Relative Reported EarningsGrowth Selection 85

    Summary 93

CHAPTER 9 Relative Price Strength Selection 95

    Relative Strength Calculations 95

    Summary 105

CHAPTER 10 Putting It Together 109

    Growth Model 109

    Value Model 113

    Summary of Growth and Value List Triggers 116

    New Model (Called the “Bargain List”) 118

    Summary 122

CHAPTER 11 Selecting and Deleting Stocks 125

    Buying 125

    Selling 127

    Sources of Relative Information 130

    Other Concerns 131

    How to Act 132

    Summary 135

CHAPTER 12 Creating a Portfolio of Stocks 137

    Maximum Drawdown 138

    Simple but Practical Methods of Creating a Portfolio 138

    Summary 146

    Conclusion 147

APPENDIX Investment Procedure Example 149

    Finding Data, Calculating Data, and

    Locating Sources 149

    The Hypothetical Value Model Portfolio 150

    Performance of Value Model 152

    Adding and Deleting Stocks 154

References 157

Index 159

Updates

Errata

PrintNumber ErrorLocation Error Correction DateAdded
1 pvi print line needs updated fixed 9/5/2008
1 p10 The management of your investments on a fee basis only is not necessarily in line with your objectives. The management of your investments only on a fee basis is not necessarily in line with your objectives. 9/5/2008
1 p19 To me, it is surprising how a theory without practical application or proof can disseminate through the investment world so quickly and thoroughly, only to be destroyed by the marketplace by its normal behavior. To me, it is surprising how a theory without practical application or proof can disseminate through the investment world so quickly and thoroughly, only to be destroyed by the marketplace behaving normally. 9/5/2008
1 p39 The fundamentalists believe that if they can determine what a stock’s “true” value is, and that value is less than how the market is pricing the security, there is an opportunity for profit when the market finally recognizes that true value. The fundamentalists believe that if they can determine what a stock’s “true” value is, and that value is more than how the market is pricing the security, there is an opportunity for profit when the market finally recognizes that true value. 9/5/2008
1 p69 In the tests, I calculated this ratio for every stock for every week over the period 2000 through 2006. In the tests, I calculated this ratio for every stock for every week over the period 1998 through 2006. 9/5/2008
1 p70 If you draw a line directly up from the price-to-sales percentile of 97, for example, it intersects the curved line at a relative performance of 40. If you draw a line directly up from the price-to-sales percentile of 97, for example, it intersects the curved line at a relative performance of 40.8. 9/8/2008
1 p29 Figure 3.1 labels: 80, 60, and 40 80, 50, and 20 9/8/2008
1 p116 Market capitalization of $1 million or better Market capitalization of $1 billion or better 9/8/2008
1 p117 Market capitalization of $500,000 Market capitalization of $500 million 9/8/2008
1 p119 In the Bargain List, I will select stocks with a strength percentile equal to or above the 97th percentile.
On the sell side, the percentile level when stocks begin to underperform out three to six months ranges between 37 and 52. I have always used the 30 level based on Levy’s studies in the late 1960s but now will change that sell trigger for the Bargain List to any level equal to or below relative strength percentile 52.
In the Bargain List, I selected stocks with a strength percentile equal to or above the 97th percentile.
On the sell side, the percentile level when stocks begin to underperform out three to six months ranges between 37 and 52. I have always used the 30 level based on Levy’s studies in the late 1960s but now change that sell trigger for the Bargain List to any level equal to or below relative strength percentile 52.
9/8/2008
1 p120 Market capitalization greater than or equal to $1 million Market capitalization greater than or equal to $1 billion 9/8/2008

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