May

11

 The first books every investor should read and study are Peter Lynch's One Up on Wall Street and Gerald Loeb's The Battle for Investment Survival. Although many of the examples are outdated, the ideas and suggestions are timeless and invaluable. Novice and veteran alike can benefit from them.

One of the great lessons from the books is how to build a shopping list of stocks.

Lynch suggests there is a 10 to 1 ratio for buying stocks. If one wants to buy one stock one needs to research 10. He believes the reason most people are not successful in investing is that they will not devote the necessary time and effort. They buy something, but they don't really know why they bought and are not really sure what to do with it once they own it.

I was struck by this idea in light of the pullback today. Plus I thought that today was a good day to take off from any trading so I had plenty of time to research my stocks.

Of the 50 stocks on my screen five are green while the rest are red. So I decided to review the stocks on my screens and try to determine why I own the ones that I own, and which ones I might like to own. I took out a legal pad and wrote a small research report on each one. Was it work? Yes. Did it take time? Yes. Was it fun? No. Will it be rewarding? I certainly hope so.

As Vic and Laurel like to say, it is very hard to gain an edge in trading and speculating. Imagine how hard it is to get an edge without doing the work.

I saw Floyd Mayweather Jr. on Jay Leno Monday evening after he defended his title against Oscar de la Hoya this past weekend. He commented that he would train four times a day to prepare for Oscar. He would even get up at 3am to do an early session. His belief was that if he would put the time in when his opponent was sleeping this would give him the edge he might need to win.

He won a split decision and the reason he won was that one judge voted for him in the 12th and final round. Otherwise the fight would have been a draw.


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