Stock Market Trading Rules: Collected Wisdom From 80 International Stock Market Experts
Format: PDF / Kindle (mobi) / ePub
Back in 2001, now more than a decade ago, The Harriman House Book of Investing Rules was compiled and published. The project was a huge success, the rules provided by the contributors were fascinating, insightful and entertaining, and for the first time the book pooled together collected wisdom of 150 of the world’s greatest traders in one place.
One of the many strengths of the rules that were written for and included in the original publication was their timeless quality – these gems of investing and trading wisdom apply to a range of markets across a spread of time periods and are not confined to one market or one set of circumstances.
And so it is that the decision was made to republish the original rules in a more condensed form and in a new format. In this eBook you will find just that; 80 sets of trading rules from expert international traders. As with the original publication, these rules provide condensed knowledge from experts about what they consider to the key determinants of trading success. You will notice that the experts do not agree, this is intentional as trading is a diverse and conflicting pursuit, and you will notice that the rules are not comprehensive, this is also intentional, as this is a reference guide to be dipped into and to encourage you to take up further reading elsewhere on subjects that appeal to you.
Traders of all experience levels will find these rules useful in clarifying aspects of their trading approach.
The original publication of 150 rules is also available as an eBook, from all good online retailers.
a better long term strategy may be to buy on bad news which has been preceded by a long string of bad news. When the market no longer declines, there is a chance that the really worst has been fully discounted. Rule #2: Don’t trust anyone! Everybody is out to sell you something. Corporate executives either lie knowingly or because they don’t know the true state of their business and the entire investment community makes money on you buying or selling something. Rule #3: The best investments
had a friend who was so worried about his stock holdings that he could not sleep at night. Morgan advised him to “sell down to his sleeping point”. He wasn’t kidding. Every investor must decide the trade-off he or she is willing to make between eating well and sleeping well. Your tolerance for risk informs the types of investment - stocks, bonds, money-market accounts, property - that you make. So what’s your sleeping point? 4. Dollar-Cost Averaging can reduce the risk of investing in stocks
extrapolations and seeming numeric certitude, the reality is that no one on earth will ever possess more than .01% of the facts necessary for a genuinely rational decision. The only constant is change. We cannot over invest in the past; the past is not always prologue for the future; the unexpected is to be expected. 2. If you don’t understand the concept, it is not understandable. Particularly in a time when huge value is created through technological innovation, the temptation is strong
internet companies in the late 1990s. While you may miss some opportunities in the short run, investing in companies with increasing annual profits will increase the probability of owning long-term successful businesses. We have seen far too many times the promise of future earnings fail to materialize. 3. Look at net income, of course, but pre-tax income is also very important. If profit growth is resulting primarily from lower tax rates, such growth is not sustainable. There must also be
that norm during the next period. Like a pendulum, stock prices swing far above their underlying values, only to swing back to fair value and then far below it. Another example: From the start of 1997 through March 2000, NASDAQ stocks (+230%) soared past NYSE-listed stocks (+20%), only to come to a screeching halt. During the subsequent year, NASDAQ stocks lost 67% of their value, while NYSE stocks lost just 7%, reverting to the original market value relationship (about one to five) between the