Product Details

• Amazon Sales Rank: #211685 in Books
• Published on: 1994-12
• Original language: English
• Number of items: 1
• Binding: Hardcover

Customer Reviews

A contrarian's delight
I'm almost ashamed of myself for not giving this book a higher rating.

Let me give you some background. This book was written in 1966. Parts of the book are hard to understand because it is very technical. I found myself reading this book three times so far, especially when the market is down. The chapter on stocks that resist general market trends is very instructive. I have read that chapter many times.

Here's the downside to all of this. Yes, I have made money based on his methods, and I firmly believe that anyone can. However, there are several issues involved here. One, you have to be realllllly patient. This is not some silly get rich quick scheme. This is a very standard buy and hold strategy like you've already heard about before. Another issue too that is very important that many people overlook is that when a stock is in a down period for a long period of time, don't buy it until it shows signs of life (breaking the resistance). This is why people lose money. The book doesn't really cover that subject very well, but the monthly newsletter The Investolator does. The problem of course is that after you buy this book, then you want or need to subscribe to the newsletter. The monthly newsletter is very informative and fills in a lot of the missing gaps particularly about when to enter a trade. Quite honestly, as much as I like the book, the monthly newsletter is a necessity for me. I can already hear the howls across the land. Yes, you've got to spend more money which makes many people wonder. I can say without reservation that the book combined with the newsletter is an excellent investment. I've been a subscriber since October of 1998. It's worth it.

Allow me to give a couple of examples. I have watched several stocks based on this book and the newsletter. Two are very noteworthy. One is CN (Calton) and the other is CCUR (Concurrent Computer). I watched CN for a long time hover around the 1 1/4 area and then it broke its resistance. As the months went by I think it hit over 6 or 7. Now it's back down again. This was quite an impressive chart pattern. CCUR was another. The newsletter recommended purchasing at a break above 5 1/4 I think it was. After it broke above that price, it then dropped down for a bit and then took off eventually going over 24. The chart patterns for both stocks were exactly like the examples in the book. The problem is, people aren't patient. It's not a get rich quick scheme. You may have to wait for years for some of these stocks to take off, but when they do, tripling is not uncommon. CN went up something like 400% or 500%. One could have easily bought CCUR when it pulled back to 4 and sold above 20. This is not hindsight. This is based on the same chart reading as the book talks about. These particular stocks had their run up from the break in resistance to their top point in a matter of months. The key is, wait until the stocks break through their resistance first. If you want to know a good reason NOT to buy a stock, look at the monthly chart of MCX. It was in a down period for a long time and looked like a good buy at around 2 or so. As of now it still has not broken above its resistance. Many people probably bought thinking it was a bargain. It's now at about 3/4. The people who claim to have lost money using this system do so because they fail to wait until a stock has broken resistance. If you are unfamiliar with stock charts, so to bigcharts.com and look up the monthly charts of CCUR, CN and MCX. Another really important lesson in the book is his explanation of trading volume. I've never read a better explanation anywhere. In fact, I've never really read any explanation as to how daily and monthly trading volume as compared to the price of the stock means anything at all. After reading this book, it all makes sense.

I'm giving this book 4 stars because it's technical analysis is outstanding. I've never seen anything like it. No emphasis on P/E ratios and all the other hype that "educated" analysts claim make stocks move. The wild buying and selling public generally make the price of a stock move. I remember watching CCUR for a long time, and it wasn't until AFTER the stock tripled that analysts suddenly took notice. Have you ever wondered why people notice a stock after it has had a runup? That's when the gullible public starts buying, pushing the price even higher and then, just like the author says, everybody who bought in at the bottom sells out just at the height of the buying frenzy. This book is so on target, it's eery. As for the contents. There's lots of charts, and they are all monthly charts which means that he is focused on the long term. My recommendation is to "paper trade" for a few months or a year until you get familiar with it. Watch a group of stocks for a while. You'll notice the chart patterns start developing. You may have to wait a long time, but it's worth it. Even "educated" analysts tell you to hold stocks for years.

Real Life Example
I'm sick of people reviewing this book who haven't started trading yet. Also, people who give vague results. I'm not one to give out personal information but I wanted to throw out a real example of a winning stock that I found using Warren's methods. I bought Repligen Pharmaceuticals in early Feb 2000. I think I paid about 5 bucks a share. (stock symbol RGEN) Today, (Sat. Feb 20) it's trading at 13 dollars a share. I realize people may think this is a fluke but I've seen the same thing happen on at least 20 other stocks that I just didn't have the money to get in on. Check the chart, find a reason why you couldn't have done the same thing.

P.S. If you can't find any charts go to any online trading site and use their free research charts.

excellent "guide" for stock market investing
I've had Ted's book now for about 10 years. Like any other "advice" book you don't want to follow it blindly but use common sense. When Ted says don't take a loss - he's mainly just trying to keep you from panicking when the markets fall. O'Neil says "take a loss if your stock falls 7% below original cost" - that's utter bull****. I bought one stock at $2 to watch it drop to $1 (didn't bail) to then watch it soar to $38!! I actually bailed at $22. You have to look for the basic trends that Ted's talking about - look in your local library and compare. The bases, triangles, etc are all there. Read his book 2-3 times, look for the patterns in current stocks, and you'll make money. I found additional patterns that he didn't mention or didn't explain very well - and made a lot of money. So use your own mind in addition to what you get out of the book. Happy Investing!