Opportunity Investing : How to Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, ... and Every Time in Between

by Appel, Gerald

• ISBN13: 9780131721296
• ISBN10: 0131721291
• Edition: 1st
• Format: Hardcover
• Copyright: 2006-09-01
• Publisher: FT Press

Summary

High return, low risk, investment strategies-without buying individual stocks-using Mutual Funds, ETFs, and Real Estate Investment Trusts. bull; Shows how to build custom diversified portfolios that are tailored to the readers' personal life situations. bull; Unlike competing authors, Appel integrates both powerful technical and fundamental analysis techniques in one book. bull; Appel is world famous for his market timing techniques which he uses in this book to rebalance individual portfolios and take advantage of changing conditions.

Author Biography

Gerald Appel is a world famous author and lecturer. A frequent guest on television and radio, he has appeared on Wall Street Week with Louis Ruykeyser and his articles and/or articles about him have appeared in Money Magazine, Barron’s, Technical Analysis of Stocks and Commodities Magazine, Stocks Futures and Options Magazine, Wealth Magazine, the New York Times, Forbes, Kiplinger’s Magazine, and elsewhere. He is the founder of Signalert Corporation, an investment advisory firm that manages more than $350 million in client assets and is the author of numerous books and articles regarding investment strategies, including Technical Analysis: Power Tools for the Active Investor (Financial Times Prentice Hall, 2005).

Table of Contents

Acknowledgments	xvii
Introduction: New Opportunities	xix
The Myth of Buy and Hold	1	(28)
Variable Rates of Return from Stocks	3	(2)
Speculative Bubbles Are Often Followed by Years of Below-Average Investment Performance	5	(1)
The Moral of the Story---Be a Flexible, Opportunistic Investor	6	(1)
Growth Targets---``The Magic 20''	7	(1)
Growth Target Zone	8	(1)
Active as Opposed to Passive Management of Assets	9	(1)
Diversification---A Major Key to Successful Investing	10	(6)
Geographic Diversification in the Developing Global Economy	10	(2)
Diversifying Geographically in Foreign Bond Markets as well as in Domestic Income Investments	12	(1)
Sector Diversification for Smoother Performance and Risk Reduction	13	(3)
Income Investing---Time Diversification	16	(1)
Creating a Bond Time Ladder	17	(2)
Year-by-Year Management of the Bond Ladder	18	(1)
Increasing Returns from the Stock Market while Reducing Risk	19	(1)
Useful Market Mood Indicators That You Can Maintain and Use in Just a Few Minutes Each Week	20	(3)
Illustrations of Mood Indicators	20	(3)
Relationships of Price Movements on NASDAQ and the New York Stock Exchange	23	(2)
How to Identify Periods When NASDAQ Is the Stronger Market Area	25	(3)
General Suggestions	28	(1)
Putting Together a Winning Portfolio	29	(28)
Which Investments Have Paid Off the Best?	30	(1)
Life May Not Be So Predictable After All	31	(1)
The Moral of the Story	31	(1)
And Perhaps Most Important	32	(1)
The Best Places to Put Your Money in Recent Decades	32	(1)
Implications for Mutual Fund Selection	33	(2)
Mutual Funds Provide Excellent Vehicles for Your Diversification Program	34	(1)
Benefits of Using Mutual Funds for Both Financial- and Nonfinancial-Based Investing	34	(1)
Mutual Fund Selections for All Seasons	35	(3)
Periods of Rising Interest Rates	35	(1)
Periods of Falling Interest Rates	36	(1)
A Quick and Dirty Way to Determine Trends in Interest Rates	37	(1)
Summing Up	38	(1)
Creating and Measuring the Performance of Well-Balanced Diversified Investment Portfolios	38	(3)
The Basic Portfolio Mix	39	(2)
Summing Up	41	(1)
Income Investing	41	(3)
Diversification Certainly Does Appear to Help the Cause!	44	(1)
Upping the Ante! Increasing Returns and Reducing Risk through Active Management of Your Diversified Portfolio	45	(1)
Employing Mutual Funds to Carry Out Sector Diversification	46	(2)
The Selection of Specific Mutual Funds	47	(1)
Comparing Performance---The Diversified Portfolio, Buy and Hold, Versus the Vanguard Standard & Poor's 500 Index Fund	48	(1)
Rebalancing the Portfolio to Improve Returns	49	(5)
An Object in Motion Tends to Stay in Motion	49	(1)
The Basic Procedure for Rebalancing Your Sector Portfolio	50	(2)
Year-by-Year Comparative Results	52	(2)
A Final Thought	54	(3)
Selecting Mutual Funds Most Likely to Succeed	57	(38)
Myths and Merits of Morningstar	58	(2)
A Quick and Dirty Checklist to Locate the Best Mutual Funds	60	(6)
Expense Ratios and Portfolio Turnover---the Lower the Better	60	(1)
No-Load Funds Are Likely to Outperform Load Funds	61	(1)
Verify That Your Brokerage House Is Giving You the Best Deal, Not Just Upping Its Own Commission	62	(1)
As a General Rule, the Lower the Fund Volatility, the Better	63	(1)
With Excellent Market Timing, Some Higher-Velocity Vehicles in Your Portfolio Might Prove Advantageous	64	(1)
Continuity of Management Is Important	64	(2)
Putting Together and Maintaining a Mutual Fund Portfolio for Long-Term, Tax-Favored Holding Periods	66	(7)
The TPS Strategy: Selecting Mutual Funds That Qualify for the ``One-in-a-Thousand Club''	66	(7)
Managing Your Buy and Hold Portfolio	73	(1)
Putting Together and Maintaining a Portfolio of Strong Mutual Funds for Intermediate-Term Investment	74	(3)
Rotating Your Portfolio at Regular Intervals to Maintain a Portfolio of Market Leaders	74	(3)
Outperforming Typical Mutual Funds	77	(1)
Past Performance	78	(2)
Upping the Ante with Double-Period Ranking Model	80	(2)
Examining the Statistical Comparisons, Decile by Decile	82	(2)
Diversification Will Almost Certainly Help the Cause	84	(2)
Conclusion	86	(1)
Getting the Maximum Bang from the Bucks in Your 401K Plan and Other Tax-Sheltered Investment Portfolios	86	(9)
Special Advantages of 401K Plans for Active Mutual Fund Management	87	(4)
One Final Thought	91	(1)
One Final Test---Confirming with T. Rowe Price	92	(3)
Income Investing---Safer and Steady . . . But Watch Out for the Pitfalls	95	(38)
The Four Legs of Your Investment Portfolio	95	(3)
Dealing with Default Risk	98	(3)
Bond Duration as a Measure of Risk	100	(1)
Securing Higher Rates of Return from Lower-Quality, Investment-Grade Bonds	101	(4)
Understanding the Total Income Return from Bonds	102	(3)
Investing in Bonds via Mutual Funds vs. Investing on Your Own	105	(4)
Bonds and Bond Funds for All Seasons	109	(21)
Money-Market Funds	109	(1)
U.S. Treasury Bills	110	(1)
Short-Term Bonds and Bond Funds	111	(2)
Intermediate-Term Bond Funds and Individual Bonds	113	(2)
Long-Term Government and Corporate Bonds	115	(3)
Treasury Inflation-Protected Securities (TIPS)	118	(2)
Zero-Coupon Bonds	120	(2)
Municipal Bonds: Winning the Tax Game	122	(3)
High-Yield Bonds and Bond Funds	125	(5)
Summing Up	130	(3)
Securing Junk Bond Yields at Treasury Bond Risk	133	(20)
The 1.25/0.50 Timing Model	135	(6)
Signals	136	(1)
Timing Decisions	137	(1)
Tracking Total Return	138	(3)
Calculating Buy/Sell Levels for Funds with Prices That Are Reduced When Dividends Are Paid	141	(3)
Example A	142	(1)
Reviewing the Procedure One Final Time	143	(1)
Handling High-Yield Funds That Do Not Reflect Interest Income in Their Share Pricing	144	(4)
Example B	145	(1)
Performance of the 1.25/0.50 Timing Model	146	(2)
Comparing Results	148	(2)
Summing Up	150	(3)
The Wonderful World of Exchange-Traded Funds	153	(26)
Enter the Exchange-Traded Funds (ETFs)	155	(1)
Pros and Cons of ETFs	156	(7)
Pros	157	(3)
Cons	160	(3)
A Closer Look at the ETF Universe	163	(2)
Income ETFs	163	(1)
Global Investment	163	(1)
Domestic Market Indices	164	(1)
Specific Overseas Countries	164	(1)
Specific Industry Groups	164	(1)
Miscellanea	165	(1)
Creating Complete, Well-Diversified Portfolios	165	(2)
Creating and Maintaining Your ETF-Based Portfolio	167	(4)
Large Cap vs. Small Cap	168	(3)
Using ETFs as Hedges Against Inflation	171	(2)
Sample Portfolios	173	(3)
The Conservative Investor	173	(2)
The Moderate Investor	175	(1)
The Aggressive Investor	176	(1)
Summing Up	176	(3)
A Three-Pronged Approach to Timing the Markets	179	(26)
Common Measures of Valuation	180	(1)
Company Earnings: The Core Fundamental	181	(3)
The Long-Term Correlation Between Corporate Earnings and Changes in Stock Prices	182	(2)
Opportunity Investing Strategy 1	184	(3)
Price/Earnings Patterns	184	(1)
Riskier Periods	185	(2)
Using Bond Yields to Know When to Buy Stocks	187	(1)
Earnings Yield	188	(1)
Opportunity Investing Strategy 2	188	(7)
Finding the Data You Need	191	(1)
Special Observation	192	(1)
Trailing Earnings vs. Forward Earnings	193	(1)
Indicator Implications	194	(1)
Bond Yield: Earnings Yield Comparisons Using Aaa Bond Yields	195	(2)
Stocks Bullish 1974--1980	196	(1)
A Significant Buying Opportunity?	197	(1)
Ten-Year Treasury Bond Yields vs. Earning Yields	197	(3)
Surprise! Buy Stocks When Earnings News Is Bad, Sell When Earnings News Is Best	200	(5)
Time Cycles, Market Breadth, and Bottom-Finding Strategies	205	(24)
Market Cycles	206	(3)
The Granddaddy of All Key Stock Market Cycles: The Four-Year (Presidential) Stock Market Cycle!	209	(2)
Confirming the Four-Year Cycle with Your Price/Earnings Ratio Indicator	210	(1)
The Link Between the Four-Year Market Cycle and the Presidential Election Cycle	211	(3)
Winning with Investments Based on the Presidential Election Cycle	212	(2)
Market Breadth	214	(14)
Market Breadth and Major Market Indices	214	(1)
Capitalization Weighted	214	(3)
Confirming Price Action of Major and Less-Major Market Indices with ``Breadth'' Indicators	217	(1)
The Advance-Decline Line	218	(2)
The New High--New Low Breadth Indicator---Including the Major Bull Market Confirming 28% Buy Signal!	220	(2)
Bottom-Finding Parameters	222	(1)
Significant Buying Pattern	222	(1)
Cautionary Conditions Indicated by New High-New Low Data	223	(1)
The 28% Major-Term New Highs Buy Signal	224	(4)
Summing Up	228	(1)
Cashing In on the Real Estate Boom---Investing in REITs	229	(22)
REITs Provide Steady and High Rates of Ongoing Income	230	(2)
Types of REITs	232	(3)
Closed-End REIT Mutual Funds	232	(3)
REIT ETFs	235	(2)
Long-Term Performance of REITs	237	(4)
The Price Movement of the REIT Index Alone Does Not Tell the Full Story	237	(4)
Dividend Payout by Type of REITS	241	(1)
Timing Your Entries and Exits	242	(3)
Links Between REITS and Interest Rates	242	(1)
For Long-Term Investment, Track the Major Channel of the REIT Sector	243	(2)
Unfavorable Implications	245	(1)
Selecting the Best Apartments in the REIT Apartment Building	245	(4)
Technical Tactics	245	(1)
Fundamental Strategies	246	(2)
Further Information	248	(1)
Summing Up	249	(2)
Opportunities Abroad---Investing from Brazil to Britain	251	(32)
Emerging Markets	252	(2)
Many Overseas Markets Outperform the U.S. Stock Market	254	(2)
Long-Term Results Reflect the Potential in Foreign Stocks	256	(1)
Participating in the Growth of Overseas Stocks	256	(14)
American Depository Receipts	257	(4)
Overseas-Based ETFs vs. Open-Ended International Mutual Funds	261	(4)
Closed-End Overseas Mutual Funds	265	(5)
When to Invest in Overseas Equity Mutual Funds and ETFs	270	(1)
Which International Funds to Buy	271	(3)
Investing in International Bond Mutual Funds for Income and for Currency Protection/Speculation	274	(2)
Open-End International Mutual Fund Investment	274	(1)
Higher-Quality International Bond Funds	275	(1)
Lower-Quality International Bond Funds	275	(1)
Closed-End Bond Funds	275	(1)
Balancing the Risks and the Potential Reward	276	(7)
Ongoing Currency Diversification Is a Useful Strategy in and of Itself	278	(1)
Your Best Approaches to Overseas Opportunities	279	(4)
How to Get the Most from Closed-End Mutual Funds	283	(18)
Open-End Mutual Funds	284	(1)
Unit Investment Trusts	285	(2)
Closed-End Funds	287	(1)
How to Buy $1 Worth of Stock or Bonds for Only 85 Cents!	288	(11)
Discounts Mean Opportunity	290	(1)
Finding the Special Bargains	290	(3)
Larger-Than-Average Discounts from Net Asset Value Provide Increased Safety as Well as Increased Opportunity for Profit	293	(1)
Taking Advantage of Premium-Discount Relationships	294	(4)
Leverage Means Increased Opportunity but Also Increased Volatility and Risk	298	(1)
Strongly Performing Closed-End Mutual Funds	299	(2)
Inflation---Coexisting and Even Profiting with Inflation	301	(14)
What Is Inflation?	301	(1)
The Benefits of Inflation	302	(1)
Runaway Inflation	303	(1)
Dealing with Inflation	304	(2)
Income Investment---Borrow Long Term, Lend Short Term	304	(2)
Adjustable-Rate Bonds---Pretty Good, but Beware of the Joker in the Deck	306	(1)
Commodity Investment---an Ongoing Hedge Against Inflation	307	(7)
Benefiting from Rising Commodity Prices	309	(4)
Summing Up	313	(1)
Final Thoughts	314	(1)
Reviewing Our Array of Opportunity Strategies	315	(20)
Ideally Achieved Investment Goals	315	(1)
Strategies to Control Risk	316	(3)
Investment Climates and Recommended Investments	319	(3)
Periods of Sharply Rising Prices	319	(1)
Periods of Steady but Moderate Inflation	320	(1)
Periods of Deflation---Prices Decline	321	(1)
Specific Investment Strategies	322	(5)
Timing the Stock Market	322	(2)
Timing Investments in the Bond Markets	324	(1)
Selecting Mutual Funds and Other Investments	325	(2)
The Basic Five-Step Investment Sequence	327	(1)
Suggested Reading	328	(7)
Periodicals	329	(1)
Books	330	(1)
Newsletters	331	(4)
Index	335

Excerpts

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