How to Make Money in Stocks: A Winning System in Good Times and Bad, Fourth Edition

The secret is to hop off the elevator on one of the floors on the way up and not ride it back down again.

So the first buy rules I made in 1960 were as follows: 1. Concentrate on listed stocks that sell for more than $20 a share with at least some institutional acceptance. 2. Insist that the company show increases in earnings per share in each of the past five years and that the current quarterly earnings are up at least 20%. 3. Buy when the stock is m

Stocks that show a 20% profit in less than eight weeks should be held through the eight weeks unless they are of poor quality without institutional sponsorship or strong group action. In many cases, stocks that advance dramatically by 20% or more in only one to four weeks are the most powerful stocks of all—capable of doubling, tripling, or more.

Ascending Bases Ascending bases, like flat bases, occur midway along a move up after a stock has run up off an earlier base. They have three 10% to 20% pullbacks with each low in price during the sell-off being higher than the preceding one, which is why I call them ascending bases.

C Current Quarterly Earnings and Sales: The Higher, the Better A Annual Earnings Increases: Look for Significant Growth N New Products, New Management, New Highs: Buying at the Right Time S Supply and Demand: Shares Outstanding Plus Big Volume Demand L Leader or Laggard: Which Is Your Stock? I Institutional Sponsorship: Follow the Leaders M Market

buying on new highs from basing patterns was important, and certain chart patterns spelled big profit potential.

Sell when there’s a great deal of excitement about a stock and it’s obvious to everyone that the stock is going higher. By then it’s too late. Jack

After a new purchase, draw a defensive sell line in red on a daily or weekly graph at the precise price level at which you will sell and cut your loss (8% or less below your buy point). In the first one to two years of a new bull market, you may want to give stocks this much room on the downside and hold them until the price touches the sell line b

Starting with only $4,000 or $5,000 that I had saved from my salary, plus some borrowed money and the use of full margin, I had three back-to-back big winners: Korvette on the short side in late 1962, Chrysler on the buy side, and Syntex, which was bought at $100 per share with the Chrysler profit in June 1963. After eight weeks, Syntex was up 40%,