ESSENTIAL STOCK PICKING STRATEGIES @Team-FLY ESSENTIAL STOCK PICKING STRATEGIES What Works on Wall Street Daniel A. Strachman John Wiley & Sons, Inc. Copyright © 2002 by Daniel A. Strachman. All rights reserved. Published by John Wiley & Sons, Inc. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4744. 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In all instances where the author or publisher is aware of a claim, the product names appear in Initial Capital letters. Readers, however, should contact the appropriate companies for more complete information regarding trademarks and registration. ISBN: 0-471-40063-7 Printed in the United States of America 10987654321 To my parents @Team-FLY The day is short; the task is great. —Ethics of the Fathers Chapter II, Verse 20 There’s a way to do it better. Find it! —Thomas A. Edison CONTENTS • ix • Acknowledgments xi Introduction xiii chapter one Investing 101 1 chapter two Growth and Value Managers 25 chapter three Sector Fund Managers 117 chapter four Resources 171 chapter five Conclusion 189 Glossary 203 Notes 209 Index 211 [...]... how it works it is important to have a clear understanding of what a stock or equity is (stocks and equities are the exact same thing, and the terms can be used interchangeably) According to the Dictio• 1 • @Team-FLY ESSENTIAL STOCK PICKING STRATEGIES nary of Business Terms, there are two types of stock: common and preferred Common stock security representing an ownership interest in a corporation Ownership... Commission’s decision that the over-the-counter securities industry needed to be automated The SEC asked the National Association of Securities Dealers, Inc to develop a market for these securities This action created the first electronic stock market These three—the New York Stock Exchange, the American Stock Exchange, and the Nasdaq Stock Market—are the primary markets where stocks are traded While regional... public as the pulse of Wall Street If the Dow is up, things must be good; if it is down, things must be bad However, the Dow is only a small representation of the total stock market in that it consists of just 30 companies Started in 1896 as a tool to measure daily stock market performance of nonrailroad • 7 • ESSENTIAL STOCK PICKING STRATEGIES stocks, the index initially tracked 12 stocks; by 1916 it... like any other profession • 9 • ESSENTIAL STOCK PICKING STRATEGIES Surgeons are good surgeons because they went to school and they practice, and the same can be said for money managers Managing money needs to be taken seriously, and the only way to do so is to focus on it and it solely as a doctor does surgery And just like some surgeons are better than others, I believe some money managers are better... This leads me to the • xvii • INTRODUCTION idea behind Essential Stock Picking Strategies: What Works on Wall Street The purpose of this book is to provide you with unique insight into money managers It is for readers who want to learn about the different investment styles and strategies of money managers who have made sound investment decisions over a significant period of time It is not to make these... corporation that enjoys priority over the remaining stock, or common stock, in the distribution of dividends and in the event of dissolution of the corporation, also in the distribution of assets.2 Now let’s explore the markets and how they work Brokers have been trading stocks in the United States since the 1700s However, organized buying and selling of stocks started at the foot of Manhattan near Wall Street. .. be good at managing money and picking stocks This, in my opinion, is rather egotistical and quite a bit of nonsense What they are saying is that professional money managers and financial planners do not have any special skills to make them more or less qualified at managing money I believe, however, that you can truly be successful at only one or two things If you want to manage money successfully you... make the businesses stronger and avoid the risk of collapse due to one individual’s recklessness Duer had a different fate He was sent to debtors’ prison, where he died penniless.3 Today one can still see the spot where the agreement was signed Although the buttonwood tree is long gone, the location is part of the office complex at 60 Wall Street that is home to a number of Wall Street s most powerful... preferred stock, which has prior claim on any dividends to be paid and, in the event of liquidation, to the distribution of the corporation’s assets As owners of the corporation, common stockholders assume the primary risk if business is poor, realize the greater return in the event of success, and elect the board of directors that controls the company.1 Preferred stock part of the capital stock of... the New York Curb Market Association (later the New York Curb Exchange) • 3 • ESSENTIAL STOCK PICKING STRATEGIES In 1953 the Curb Exchange changed its name to the American Stock Exchange and in 1998 the American Stock Exchange merged with the Nasdaq Stock Market The New York Stock Exchange continues to remain an independent entity owned by its seat holders The Nasdaq Stock Market was born in 1971 as . distinguish one group from another. On this particular day, I was in the municipal bond area, an area that was on the verge of extinction, partly because the stock market was on a tear. We were all talking. Mississippi; Sarah Theodore, a fantastic librarian and researcher unlike any other; Desmond MacRae, a truly one-of -a- kind individual with theories on practically everything; and Jeff Zack, a dear friend. understanding of what works on Wall Street, so that you can profit from good invest- ment strategies and make money in both bull and bear markets. I have chosen money managers who have solid track records