Want to profit from the stock markets? If you strictly adhere to all of our rules (not just the ones you like), you will see a material improvement in the performance of your stock investments.
Consider buying stocks with each of the last three years' earnings up 25%+, return on equity (ROE) of 17%+ and accelerating sales.
Recent quarterly earnings and sales should be up 25% or more.
Never buy or sell stocks on tips or rumours… never.
To avoid huge losses, cut every loss when it’s 8% below your cost. Make no exceptions. Never ‘average down’ in price.
Sell when the stock reaches new lows along with high volumes.
Buy when market indices are on an uptrend. Three out of every four stocks follow the market, either up or down. Reduce investments and raise cash when general market indices show five or more days of high selling volumes.
Buy leading stocks in the leading industry groups. Nearly half the price rise/fall of a stock is because of the strength/weakness of its industry group and sector.
Invest in companies with high promoter/management ownership of stock.
Buy stocks breaking out in heavy volume from chart patterns like cup with a handle, flat base, double bottom, etc.
Select stocks with increasing institutional investment over recent quarters.
Current quarterly after-tax profit margins should be improving, near their peak and among the best in the stock's industry.
Don’t buy because of dividends or PE ratios.
Invest in companies with a superior new product or service.
Invest mainly in entrepreneurial companies.
Companies’ prices rise the most during 8 years immediately after the initial public offering (IPO). Pay close attention to companies which have had an IPO in the past 8 years.
Check companies buying back 5% to 10% of their stock.
Check companies with a new management.
Don’t try to bottom guess or buy a stock on its way down. Never argue with the market. Forget your pride and ego. Don’t back your judgements until the action of the market itself confirms your opinion. Don’t let your emotions enter your investment decision.
Find out if the market currently favours large cap or small cap stocks.
Do a post-analysis of all your buys and sells. Post on stock charts where you bought and sold each stock. Evaluate and develop rules to correct your major past mistakes.