Page 1010 - How to Make Money in Stocks Trilogy

Start Here 3

2. Only Buy Stocks When the Overall Market Is in a
“Confirmed Uptrend”

IBD’s study of every market cycle since 1880 shows 3 out of 4 stocks move
in the same direction as the overall market, either up or down.
The “overall” or “general” market refers to the major indexes, primarily
the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average.

When the market is trending down, about 75% of all stocks will
eventually decline with it.

Does that sound like a good time to buy stocks? To keep the odds in your
favor and make it much easier to grow your money, be sure to only make
new purchases when the market is in an uptrend.
As you’ll see in the next section, “The Basic Game Plan for Making
Money in Stocks,” you’ll know if the market is in an uptrend or downtrend
simply by checking the Market Pulse inside IBD’s The Big Picture column.
Only make new buys when the current outlook is “Confirmed uptrend.”

© 2013 Investor’s Business Daily, Inc.

See the Buying Checklist section for more on this key rule and how to
apply it.

Protect and Prosper

Most people start out focusing on what stocks to buy and ignore the other
absolutely critical part of the puzzle—when to sell.
All too often, a new investor won’t realize he or she needs some sell rules
until after suffering a large loss. Don’t let that happen to you!
Start off right by sticking to these two basic rules. They’ll help pro-
tect your money as you learn to pick winning stocks and prosper.