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20 Wisdom Points from the Book ‘Superperformance Stocks’

If you read Jesse Livermore’s “How to Trade in Stocks” from 1940, Nicolas Darvas’s ‘How I made 2M in the stock market” from 1960, Richard Love’s “Superperformance Stocks” from 1977, William O’Neil’s early version of “How to make money in stocks” from the 1990s or Howard Lindzon’s “The Wallstrip Edge” from 2008, you will realize that after so many years, the main thing that has changed in the market is the names of the winning stocks. Everything else important – the catalysts, the cyclicality in sentiment, has remained the same.

Here are some incredible insights from Richard Love’s book ‘Superperformance Stocks’. In his eyes, a superperformance stock is one that has at least tripled within a two-year period.

1. The first consideration in buying stock is safety.

Safety is derived more from the good timing of the purchase and less from the financial strength of the company. The stocks of the nation’s largest and strongest corporations have dropped drastically during general stock market declines.

The best time to buy most stocks is when the market looks like a disaster. It is then that the risk is lowest and the potential rewards are highest.

2. All stocks are price-cyclical

For many years certain stocks have been considered to be cyclical; that is, the business of those companies rose and fell with the business cycle. It was also assumed that some industries and certain companies were noncyclical— little affected by the changes in business conditions. The attitude developed among investors that cyclical industries were to be avoided and that others, such as established growth companies, were to be favored. To a  certain extent this artificial division of companies into cyclical and noncyclical has been deceptive because although the earnings of some companies might be little affected by the business cycle the price of the stock is often as cyclical as that of companies strongly affected by the business cycle. Virtually all stocks are price-cyclical. Stocks that are not earnings-cyclical often have higher price/earnings ratios, and thus are susceptible to reactions when the primary trend of the market begins to decline. This can occur even during a period of increasing earnings.

3.  A Superb Company Does Not Necessarily Have a Superb Stock. There are no sure things in the market

There has been a considerable amount of investment advice over the years that has advocated buying quality. ”Stick to the blue chips,” it said, “and you won’t be hurt.” But the record reveals that an investor can be hurt severely if he buys a blue chip at the wrong time. And even if he does not lose financially, he usually has gained very little, particularly considering the risks he has taken. (more…)

20 Thoughts from -Richard Love’s “Superperformance Stocks”

If you read Jesse Livermore’s “How to Trade in Stocks” from 1940, Nicolas Darvas’s ‘How I made 2M in the stock market” from 1960, Richard Love’s “Superperformance Stocks” from 1977, William O’Neil’s early version of “How to make money in stocks” from the 1990s or Howard Lindzon’s “The Wallstrip Edge” from 2008, you will realize that after so many years, the main thing that has changed in the market is the names of the winning stocks. Everything else important – the catalysts, the cyclicality in sentiment, has remained the same.

Here are some incredible insights from Richard Love’s book ‘Superperformance Stocks’. In his eyes, a superperformance stock is one that has at least tripled within a two-year period.

1. The first consideration in buying stock is safety.

Safety is derived more from the good timing of the purchase and less from the financial strength of the company. The stocks of the nation’s largest and strongest corporations have dropped drastically during general stock market declines.

The best time to buy most stocks is when the market looks like a disaster. It is then that the risk is lowest and the potential rewards are highest.

2. All stocks are price-cyclical

For many years certain stocks have been considered to be cyclical; that is, the business of those companies rose and fell with the business cycle. It was also assumed that some industries and certain companies were noncyclical— little affected by the changes in business conditions. The attitude developed among investors that cyclical industries were to be avoided and that others, such as established growth companies, were to be favored. To a  certain extent this artificial division of companies into cyclical and noncyclical has been deceptive because although the earnings of some companies might be little affected by the business cycle the price of the stock is often as cyclical as that of companies strongly affected by the business cycle. Virtually all stocks are price-cyclical. Stocks that are not earnings-cyclical often have higher price/earnings ratios, and thus are susceptible to reactions when the primary trend of the market begins to decline. This can occur even during a period of increasing earnings. (more…)

Famous Investment Quotations

“Before you invest, investigate.” William Arthur Ward (1921-1994) author, educator.

“With an evening coat and a white tie, anybody, even a stock broker, can gain a reputation for being civilized.” Oscar Wilde (1854-1900) Poet & playwright

“Never invest in anything that eats or needs repainting.” Billy Rose (1899-1966) Composer and entrepreneur

Emotions are your worst enemy in the stock market.” Don Hays, stock market commentator

“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” Warren Buffett (1930- ) businessman and investor

“Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.” Peter Lynch (1944- ) money manager

“Gentlemen prefer bonds.” Andrew Mellon, Businessman & financier (1855-1937)

“Anyone who thinks there’s safety in numbers hasn’t looked at the stock market pages” Irene Peter

“The stock market has forecast nine of the last five recessions” Paul A. Samuelson

“The arts are an even better barometer of what is happening in our world than the stock market or the debates in congress.” Hendrik Willem Van Loon

“If stock market experts were so expert, they would be buying stock, not selling advice.” Norman R. Augustine

“Now is always the most difficult time to invest.” Anonymous

“I can’t figure the stock market out. I think it’s wacky. I have done well with a long-term strategy and will continue being a long-term investor.” Scott McNealy

“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.” William Feather

It’s easy to grin when your ships come in and you’ve got the stock market beat, but the man worth while is the man who can smile when his pants are too tight in the seat” Anonymous

“My job is to make people money. If I don’t include every factor that moves a stock, market psychology included, then I’m not doing my job.” Thomas Kurlak

The most valuable things in life are not measured in monetary terms. The really important things are not houses and lands, stocks and bonds, automobiles and real state, but friendships, trust, confidence, empathy, mercy, love and faith.” Bertrand Russell, Philosopher (1872-1970)

“Stock prices have reached what looks like a permanently high plateau” Irving Fisher, Economist, (1867-1947)

“A stockbroker urged me to buy a stock that would triple its value every year. I told him, ‘At my age, I don’t even buy green bananas.'” Claude Pepper

“If you hear that everybody is buying a certain stock, ask who is selling.” James Dines, Investment newsletter writer (1935- )