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Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell
- By Charles D. Kirkpatrick
- Published Aug 25, 2008 by FT Press.
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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
- 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
Online Sample Chapters
Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell
Introduction to Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell
Sample Pages
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 |