Stock Market Wizards potx

[...]... what a stock' s true value should be The second thing we look for is a market- adjusted decline of at least 50 percent I say market- adjusted because if the market is down 50 percent, then the stock being down 50 percent doesn't mean anything If the market is down 10 percent, 1 want to see the stock down 60 percent I find that interesting, because I know that statistical studies show that buying stocks... these stocks? Market sentiment The market was getting very excited about conceptual IPOs—stocks with a dream and a story but no earnings When stocks like these go sour, they can go down 70 percent or more very quicldy It was as if a tornado had swept through my portfolio I was down 12 percent for the month and decided to liquidate everything One stock that I bought at 18, I sold at 2 If these stocks... trafficking in quality growth names I bought the stocks that went up more than the market when the market was going up I figured those were the horses to bet on I forced myself to buy these stocks on down days I found these stocks would often go up five points in a week, whereas I would have been lucky to get five points in a year in the low-quality stocks I had previously been buying The only time... interested in the stock market? I came from a family that never read The Wall Street Journal, never bought a share of stock, and never invested in mutual funds I didn't know anything about the stock market until I was in college When I attended the University of Arkansas, I took an investment course that sparked my interest What about the course intrigued you? Doing research on a stock As a main project... lots of other people were buying the same stock, and a million reasons why the stock would go up So you tried to make the stock sound as good as possible without any qualifications? Absolutely That's what all stockbrokers do Weren't you troubled by making something uncertain sound certain? Sure, but it wasn't exactly lying, because I had no idea whether the stock would go up or not It was, however,... the market is responding to macroeconomic news and other events It's almost like looking at the entire market as if it were an individual stock How long do you typically hold a stock once you buy it? I don't day trade, but I only hold a stock for an average of about a few weeks Also, when I buy a stock, even if it's a core position of a few hundred thousand shares, I might be in and out of it twice... out of a stock? I get out either because the stock looks as though it's rolling over, and I am in danger of losing what I have made, or because the stock has made too much money in too short a period of time Would you then look to buy back the stock on a correction? Yes Does that work, or do you often end up missing the rest of the move? I often end up missing the rest of the move because the stocks... stronger than the market average—tend to do better than the general market Yet you are only buying stocks that are relatively weak Relative weakness is a gradual Chinese torture-type of decline I'm not talking about relative weakness; I'm talking about a catastrophic plunge To use the example of one of our recent holdings, Tektronix, when a stock goes from nearly $50 to $15 at the same time the market has... force—stocks that enjoy positive market perceptions and are ultraliquid so that firms can transact a maximum number of shares Any exceptional money-making potential of the idea, or risk to capital if market perceptions turn negative, is strictly an afterthought Recommending stocks that are deemed as potentially stigmatizing in a client's portfolio because of recent disappointments, or recommending stocks... holdings (fifteen stocks typically account for 75 percent or more of assets) He believes broad diversification is a recipe for mediocrity: "The greater the number of stocks you hold, the more marketlike your performance becomes." To winnow down the universe of U.S stocks to a mere fifteen core positions requires a very restrictive selection process To end up on Lauer's short list, a stock must pass six . Data Schwager, Jack D., 1948- Stock market wizards : interviews with America's top stock traders / by Jack D. Schwager. p. cm. ISBN 0-06-662058-9 1. Stockbrokers—United States—Interviews. . bought the stocks that went up more than the market when the market was going up. I figured those were the horses to bet on. I forced myself to buy these stocks on down days. I found these stocks would. selling stocks that had gone up a lot, you were buying the expensive stocks. That theme has continued to this day. The hardest thing to do is to buy a high-flying stock or to sell a stock that