Thursday, 14 April 2016

Book reviews: The Next Apple & Bull's Eye Investing


The Next Apple

This is a new-age book which I discovered in the library on investing. To sum it up, the strategy that the authors advocated is mostly applicable at the start of a bull run or in good economy times (stable stock market) because it's main tactic is to pick the stock when it keeps climbing and goes pass its 52-week high with at least 50% break-out from a technical base. More of a technical read than fundamental, it's teaching us how to ride on momentum stocks.

However, I find the authors contradicting themselves by saying you should buy stocks that fulfilled the momentum criteria when not many people of the public know about those stocks yet (well, the only reason I could think of which caused the momentum would then be institutional investors who are driving the stock prices up and not so much of retail investors).

Some take-home points about risk management (one of my favourite topics to read):
  • Pick stocks that have potential to appreciate substantially (think Earnings growth).
  • Make sure our inevitable mistakes are not going to hurt our returns too much.
  • Stay with our winning stocks long enough to make a difference in our returns.
  • Be careful of down crash, use stop-loss (as per usual) - I am thinking of trailing stop-loss though that's not covered.
  • Make sure our position sizing doesn't hurt our performance, sleep and confidence.
  • To be active in the market when it is worth being active. To do nothing when there's nothing to do.

"Before every stock reaches 200% return in a year, it is up only 50% at some point in that year."


Next up...


Bull's eye investing

I find this a refreshing read from the boring old FA stuff.

Many times it mentioned that we are in a secular bear market since 2000 (what now?) and talked about how we could tackle it. It also flagged out something we often overlooked in our course of investing - that at different times, different 'trending' stocks push the market up (means at different time points in the stock market centuries, different hot industries drove the economy). Then there's some draggy parts about mutual funds which I skipped.

Interesting bits on investor's psychology here... 6 mistakes of investors:




Rules for value investing:
  • Cut your losers and let your winners ride.
  • For every stock you buy, set target prices for selling to collect your profit in stages. Set targets.
  • Be patient. Trust your research (read more at the Graham's number part).
  • Don't try to time the stock.
  • Do not fall in love with your stock.
  • Diversify. (And I refer back to the topic on position sizing.)
"Numbers don't lie, but you can lie with numbers."

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Here's an example of a secular bear market chart which I plucked off google, in case you don't know what that means. It's pretty much a period of consolidation, simply put.



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This marks the end of my very brief book summaries. If you have read them, do share with me what other 'gems' you found inside.

Time to pack for my Taiwan trip tomorrow.
Ciao~

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