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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