Über die Autorin bzw. den Autor

AMY SMITH is the host of Investor's Business Daily's Market Wrap Video at Investors.com and co-host of 870-AM The Answer Radio How to Make Money in Stocks weekly show. She is also IBD Meetup Development Director and IBD Radio, and TV Market Commentator.

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

How to Make Money in Stocks Success Stories

McGraw-Hill Companies, Inc.

Contents

Chapter One

"Teachers open the door, but you must enter by yourself." —CHINESE PROVERB

The beginning martial artist enters the dojo with some trepidation and hesitancy, wondering what will be expected during the training. The black belt instructor enters the room preparing to teach and yells "Charyot!" (Attention!).

A new investor feels the same uncertainty. What will be required? Can I really learn to be a successful investor? And investors with more experience might wonder if they can improve their results. The answer is yes; absolutely: virtually everyone can learn to invest successfully as long as they are willing to follow a proven system and keep a simple set of rules.

"Nothing is impossible to a willing mind." —THE BOOKS OF HAN DYNASTY

You have a desire to improve your life and your financial situation. Congratulate yourself for taking the chance.

Whether your motivating factor is to take a vacation, to buy a home, to generate retirement income, to build a college fund for children or grandchildren, to do more with your own money, or a wish for complete financial independence, you can learn to invest successfully if you're willing to follow a proven investment strategy and keep some simple rules.

Mike Scott was laid off when defense industry cuts hit California and he needed to replace his income.

Calvin Shih got motivated to learn more about investing after watching his dad's stock account dwindle after the dot-com crash.

Carole Shontere wanted to stop the bleeding in her husband's 401(k).

At the age of 50, Jerry Powell was faced with a tough job reassignment and would be on the road 60% of the time.

"Aloha Mike" was disillusioned with the corporate grind.

Jim Taub was looking for retirement income.

Townsend Baldwin was wiped out financially in the dot-com crash while he was on a humanitarian mission in Argentina.

Kathleen Phillips needed to work from home when diagnosed with multiple sclerosis.

Gay Walsh's IRA accounts were losing money.

Anindo Majumdar wanted to quit his corporate job and spend more time with his family.

Katrina Guensch lost a significant amount of money that had been left to her by her father during the 2008 bear market.

Bharani was working as an IT professional and wanted to increase his income.

Brian Gonzales wanted to pay off his student loans.

Jeannie McGrew was frustrated watching an investment advisor lose money year after year with her husband's 401(k) and figured she could do a better job.

Ken Chin wanted to be financially independent.

Barbara James' husband died, she lost her job, and she needed an income.

"We are only bound by our limitations to believe." —MARK BISHOP, OKINAWAN KARATE INSTRUCTOR

Most people lose money in the market, but it definitely doesn't have to be that way.

Contrary to popular belief, you can time the market, or at least you can put the odds in your favor if you follow a few basic rules, the most important one being to follow the market's overall trend.

"Buy and hold" is an investing approach that historically has not worked very well. As a result of that type of investing strategy, many investors lost money in the bear market of 2007–2008, not only in their personal accounts but also in their IRAs. All too many baby boomers are sitting on investments that are simply underperforming their needs for retirement.

The gift that you have as an individual investor is that you can get in and out of the market with greater ease than the professional investor who may take months to fill a huge position in a single stock.

Investor's Business Daily® (IBD®) has research going back to 1880 to help guide investors through every type of market, whether bull or bear. There has also been an in-depth study of the market's biggest winners and the characteristics they had in common prior to making their big runs.

Don't be intimidated by a lack of knowledge or past failure with investing. Everyone starts somewhere, and even if you haven't succeeded in the past, it doesn't mean you can't succeed in the future. The truth is, most people lose money in the stock market because they have no strategy or system that they follow. Many investors buy stocks because they like the company, or someone gave them a hot tip, or the stock seems like a bargain because it has pulled back a lot in price.

It is the institutional investors that drive the money in the market. They are looking for companies that are making products that are in big demand.

We all know the story of Apple, one of the best examples of a company that has been completely innovative and created products that were in big demand from 2004 to 2012. Apple's innovations have produced skyrocketing earnings and sales that captured the attention of the institutional investors—the mutual funds, banks, pension funds, and hedge funds.

Finding these big stock market winners is not as hard as you might think. They appear in every bull market, cycle after cycle. You only need to look at history as your guide. You don't need insider information or a relative who works on Wall Street, and you don't have to take tips that you might hear on TV.

What if you could buy the highest quality merchandise that you can find, the true market winners that are the best the market has to offer? These are stocks that vastly outperform the major moving averages.

Get ready for an exciting and profitable journey in the stock market. The only requirements are the following:

• Set aside sufficient time to analyze the charts.

• Develop discipline.

• Follow a set of time-tested rules.

• Be willing to look at your mistakes and correct them.

Let's get started!

Chapter Two

"He who knows when he can fight and when he cannot, will be victorious." —SUN TZU

For a martial artist, bowing is a display of respect. An investor must bow to the market and respect the overall trend. Contrary to popular belief, you can time the stock market.

Every investor would like it if the stock market went up all the time, but that's not the way market cycles work. There are times to be in the market to maximize your gains, and there are times when you should step to the sidelines to avoid losses.

Understanding the Trend

It's important to understand whether the stock market is in an uptrend or a downtrend. Investing in an uptrending market is the most important factor for achieving gains.

What Starts a New Uptrend

A follow-through day signals an important change in the general market direction from a downtrend to a new uptrend.

As an index rallies a few days off its lows, one of the major indexes will close the day higher 1.5% or more on bigger volume than the previous day. This signals that professional money is coming into the market, causing the indexes and leading stocks...