Key Points from Book: One Up on Wall Street

Never invest in any company before you’ve done the homework on the company’s earnings prospects, financial condition, competitive position, plans for expansion, and so forth

History tells us that corrections occur every couple of years, and bear markets occur every six years. Sever bear markets have materialized five times since the 1929-32 doozie

That’s not to say there’s no such thing as an overvalued market, but there’s no point worrying about it

Ultimately it is not the stock market nor even the companies themselves that determine an investor’s fate. It is the investor

As I look back now, it’s obvious that studying history and philosophy was much better preparation for the stock market than, say, studying statistics

Clearly the stock market has been a gamble worth taking, as long as you know how to play the game

Before you invest anything in stocks, you ought to consider buying a house

Only invest what you could afford to lose without that loss having any effect on your daily life in the foreseeable future

Pick uo the right stocks and the market will take care of itself

Invest in companies, not in the stock market

The long term returns from stocks are both relatively predictable and also far superior to the long term returns of from bonds

But for as long as they can keep it uo, fast growers are the big winners in the stock market. Look for the one with good balance sheets and are making substansial profits. The trick is figuring out when they’ll stop geowing, and how much to pay for the growth

There are many reasons that insiders might sell. But there’s only one reason that insiders buy: they think the stock price is undervalued and will eventually go up

Avoid companies who is overvalued and acquiring other company outside their competencies

When cash increases relative to debt, it’s an improving balance sheet.

When cash exceeds debt it’s very favorable. It will not go out of business

If the p/e ratiomis less than the growth rate, you may have found yourself a bargain

A normal corporate balance sheet has 75% equity and 25% debt. More equity is better

Overvalued assets on the left sude of the balance sheet are especially treacherous when there’s lot of debt in the right

Look for small companies that are already profitable and have proven that their concept can be replicated

It’s better to miss the first move in stock and wait to see if a company’s plans are working out

A price drop is an opportunity to load up on bargains from among your worst performers and your laggards that show promise

If you have a list of companies that you’d like to own if only the stock price were reduced, the end of the year is a likely time to find rhe deals you’ve been waiting for

Trying to catch the bottom on a Falling stock is like trying to catch a falling knife. It’s normally a good idea to wait until the knife hits the ground and sticks, then vibrates for a while and settles down before you try to grab it

If the story is still good and earnings keep growing, then of course it (price) can go higher


About Journeyman

A global macro analyst with over four years experience in the financial market, the author began his career as an equity analyst before transitioning to macro research focusing on Emerging Markets at a well-known independent research firm. He read voraciously, spending most of his free time following The Economist magazine and reading topics on finance and self-improvement. When off duty, he works part-time for Getty Images, taking pictures from all over the globe. To date, he has over 1200 pictures over 35 countries being sold through the company.
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