Beat the Market : Win with Proven Stock Selection and Market Timing Tools

by Appel, Gerald

• ISBN13: 9780132359177
• ISBN10: 0132359170
• Edition: 1st
• Format: Hardcover
• Copyright: 2008-12-11
• Publisher: FT Press

Summary

'If you are wrong about the direction of the general market, then 3 out of 4 of your stocks will plummet with the market averages. You must have a reliable method to determine if you are in a bull or a bear market.'-William O'Neill, founder of Investor's Business Daily. You can clearly outperform 'buy and hold' stock market investment strategies. Leading investment expert Gerald Appel introduces those strategies, demonstrates how they've been proven successful through 25 years of historical performance, and shows you exactly how to use them. Using Appel's techniques, you'll learn how to forecast the likely direction of the market, and its relative strength compared with fixed income and other investments. In this new book, you'll learn how to identify when the wind's 'in your face,' and it's time to move your money out of equities. You'll also learn how to recognize a rising wind 'at your back,' when the odds of broad stock market increases are at their highest. When the market is likely headed up, Appel's techniques help you identify the specific mutual funds, exchange traded funds, and market sectors that are likely to be most profitable. Simply put, Appel gives you all the tools to gain the two pieces of information that are best correlated with superior performance: what you should be buying and selling, and when you should be buying and selling it.

Author Biography

Gerald Appel has, since 1973, published Systems and Forecasts, a leading technical analysis publication. He is legendary for his work in technical analysis and market timing, including the creation of Moving Average Convergence/Divergence (MACD), one of the field’s most valuable tools. His books include Opportunity Investing, Winning Market Systems, and Technical Analysis–Power Tools for Active Investors. His company, Signalert, with its affiliates, currently manages approximately $250,000,000 in private capital. He has trained thousands of traders through his renowned tapes, seminars, and workbooks.

Table of Contents

Introduction	p. xix
Prologue	p. xxiii
Your Basic Investment Strategy	p. 1
The Best and Worst Mindsets for Profitable Investing	p. 3
Bond-Stock Valuation Models-A Key Market Forecasting Tool	p. 7
The Search for Something Simple, Useful, and Stable	p. 8
Bond-Stock Valuation Models	p. 9
Investments to Be Compared	p. 14
The General Concept of Bond-Stock Valuation Models	p. 15
Money Goes Where It Is Best Treated	p. 16
Interest Rate Relationships and Past Performance	p. 17
Further Observations	p. 23
Further Evidence	p. 23
Government Bond Yields Compared to Earnings Yields	p. 25
Implications of the Safety of Government Instruments	p. 25
Averaging Yields of Longer-Term Treasury Notes and Shorter-Term Treasury Bills	p. 26
Compare Earnings Yields from Stocks to Interest Yields, This Time from the Highest Grade of Government Income Issues	p. 27
Commentary	p. 31
Handling Money Management at Other Times	p. 31
Achieving a 92.59% Profit Ratio	p. 33
92.6% Reliability: Increasing Returns and Reducing Risk by Combining Your Two Bond-Stock Valuation Models	p. 36
The Basic Principles of the Double-Entry Bond-Stock Valuation Timing Model	p. 37
Condition #2	p. 40
Blended Performance (1981-2007)	p. 42
Periods with Lower Profit Potential	p. 44
A Signal to Stay Absolutely Clear of the Stock Market	p. 46
Summary	p. 48
How to Gauge the True Inner Pulse of the Stock Market	p. 49
The Significance of Breadth in the Stock Market	p. 50
Advance-Decline Indicators	p. 51
Required Data to Calculate Breadth Signals	p. 54
The Calculations Required for the Weekly Breadth Reading	p. 55
The Next Step-Creating a Six-Week Exponential Moving Average of Weekly Readings	p. 57
The First Step in Maintaining Exponential Averages: The Smoothing Constant	p. 60
Applying the Formula: First Example	p. 62
Calculating the Exponential Moving Average of the Weekly Breadth Reading	p. 64
Summing Up	p. 69
Buy and Sell Signals Generated by the Six-Week EMA of the Weekly Breadth Reading	p. 69
Final Review	p. 70
The Historical Performance Record of Breadth Signals	p. 72
Final Thoughts	p. 81
Indicator Synergy Plus	p. 83
Characteristics of TWIBBS	p. 83
Evaluating the Benefits of TWIBBS	p. 85
Final Thoughts	p. 88
A Stock Market Power Gauge	p. 88
Creating the Best Blends of Risk and Reward in Your Portfolio	p. 89
Analysis of Table 7.2: The Best Pockets of Investment Blends	p. 93
How the Timing Models Allow You to Take Greater Risks, While Maintaining a High Degree of Safety	p. 96
The Nest Is Empty-A Final Burst of Accumulation	p. 99
Retirement Period	p. 101
A Quick Review of the Features of All the Timing Models	p. 101
Putting Together Your Winning Investment Portfolio	p. 105
The First Step: Diversification	p. 105
How and Why Diversification Works	p. 107
How Diversification Performs Its Magic	p. 109
A High-Velocity Diversified Portfolio for Aggressive Investors	p. 111
Past Performance	p. 114
Summing Up	p. 119
A Primer for Profitable Mutual Fund Selection	p. 121
Open-Ended Mutual Funds: Professional Management, Ready Liquidity, Wide Choices, Popularity, But...	p. 121
All Buyers and Sellers Pay the Same Price Each Day	p. 123
Liquidity Has Been Broad and Flexible, But Not Without a Price	p. 124
Professional Management: Pros and Cons	p. 125
Tax Traps in Mutual Fund Investing	p. 127
Star Ratings... Another Booby Trap?	p. 128
Strategies for When to Play It Hot and When to Play It Cool	p. 129
Mutual Funds for All Seasons: Long-Term Consistency, Low Beta, Solid Management, Strong Performance/Risk Relationships	p. 131
Exchange-Traded Funds-An Alternative to the Traditional Mutual Fund	p. 135
Recommended Reading	p. 137
Internet Information	p. 137
Momentum Investing-Win by Going with the Flow	p. 139
Relative Strength Trading in Mutual Funds	p. 139
Monitoring, Selecting, and Maintaining Mutual Fund Portfolios with Superior Profit Potential and Risk Characteristics	p. 140
Performance of the Quarterly 10% Rebalancing Strategy over the Years	p. 142
Commentary	p. 145
Combining Mutual Fund Selection Strategies with Your Market Timing Models for the Best Risk/Reward	p. 147
How Relative Strength Investing May Be Affected by the Status of the Market Timing Models	p. 148
Commentary	p. 149
Creating and Maintaining "Killer ETF Portfolios" via Quarterly Relative Strength Rebalancing	p. 150
The Ten Style Boxes in Your Portfolio	p. 151
Performance of the Top-3 Investment Strategies	p. 153
Summing Up	p. 155
The Final Word	p. 157
First Step-Set Aside Investment Capital, Starting as Early as Possible and with as Much Capital as You Can Afford	p. 157
Second Step-Add to Your Investment Capital Consistently	p. 158
Epilogue	p. 163
Performance Histories: Five Timing Models	p. 167
Commentary	p. 173
The Weekly Stock Market Power Gauge	p. 173
Rules for Dealing with Combinations of Negative and Positive Numbers	p. 175
Related Websites	p. 176
Index	p. 177
Table of Contents provided by Ingram. All Rights Reserved.

Excerpts

Introduction IntroductionI am going to begin this book with a promise.I believe that most readers of this book will be able to complete it within two to three weeks. This work has been purposely left short of philosophy, fluff, and filler. Its content is dense with instruction, theoretical and actual performance results, tactics, and strategies that you can employ immediately.If you do your partthat is, to complete the reading and to work through the examples withinyou will emerge from the process with all the information you should need to become a savvy and highly successful investor for years to come.You will learn to recognize when stocks should be bought, when they should be held, and when they should be sold. The Weekly Market Power GaugeYou will learn readily followed, easy-to-understand, and efficient stock market indicators associated with general levels of interest rates that will help you identify those periods when stocks are very likely to advance in price, when they are only just likely to advance in price, when you might just as well stay home, and when staying home with your capital is likely to be an excellent idea.You will also learn an indicator that is designed to identify, by just one weekly indicator of stock market performance, the time when prices are likely to continue to rise for weeksoften even for monthswith a high probability of accuracy. The best gains in the stock market occur when this indicator is in effect. At other times, gains tend to be more limited.The combination of these indicators may be taken to reflect the Weekly Market Power Gauge. When the gauge is indicating unanimous strength in the indicators you follow, the odds very heavily favor being in stocks. Low readings in the gauge suggest caution.In other words, you will learn how and when to put the probabilities on your sideto invest when risks are the least and to recognize when risks are the greatest.You will also learn how to build your stock portfoliowhat to buy and what not to buyand how to blend the components of your portfolio in such a way that the whole is better performing than the average of its parts, as well as how to select mutual funds and exchange traded funds that are most likely to outperform the average stock, fund, or exchange-traded fund.I cannot promise profit on each and every trade. I can promise, however, that you will have put at your own disposal, the ability to invest objectively, to invest with a plan and strategy, and to invest, over the long term, very successfully. Demystifying the Process of Investing...If you are reading this book, there is a good chance that you at least occasionally tune in to those television programs on CNBC, Bloomberg, or elsewhere that feature up-to-the-minute stock market reports, intermixed with streams of market expertswith sometimes up to four or even six heads at a time, and usually with a bullish biaswho agree or disagree regarding prospects for the stock market, near and long term.Given the constraints of television time, experts are provided with one or perhaps a few minutes to succinctly stake out their positions. For the most part, Wall Street pundits tend to be optimisticparticularly corporate representatives, who, naturally, have their own stakes in expressing optimism regarding their own industries or companies, or executives of mutual funds, w