Wednesday 14 January 2015

The Little Book of Big Profits from Small Stocks Summary - Chapter 12

Chapter 12: Low Prices and High Profits

1.      Over the years I found that low-priced breakout stocks to be the single best area for investors to earn explosive gains.
2.      It is difficult for investors to make money in well-known big stocks with dozens of analysts following.
3.      By getting ahead of Wall Street in lower-priced stocks we benefit from the institutional pack mentality that dominates many traditional investment managers. When they are selling and pushing stocks to low prices, we are buying. Then, when their excitement for those stocks return, we are selling to them. There simply is no better way for individual investors to outperform the market in my opinion.
4.      One of the most important takeaways I hope you have from this little book is that an optimistic approach to the markets will serve you a lot better as an investor than being overly fearful. If you focus on the fear you miss opportunities.
5.      Markets are going to have declines. There will be recessions and bear markets throughout your career. The right way to look at these occasions is as inventory creation events, not catastrophes.
6.      The best investors are well aware that every bear market has ended and every economic recession has been followed by an economic recovery. Besides, they read voraciously to keep up with the world and the markets. Read everything you can as often as you can is some of the best advice I can give you about successful investing.
7.      In the stock market, optimism pays off over time. It always has and always will.
8.      Investing in low-priced stocks demand you to do homework.
a.       Read 10Q and 10K. Pat attention to the footnotes.
b.      Check the materials on investor’s relation section.
c.       Check who is buying or selling the stock.
9.      Diversify your portfolio:
a.       You do not want to own all stock in a single industry.

b.      Try to find companies that respond differently to economic and market events.


END

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