Page 1025 - How to Make Money in Stocks Trilogy

18 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

M Market direction
History shows 3 of 4 stocks simply follow the direction of the general market,
either up or down. So you must learn to follow, not fight, the current trend.

We’ll get into what steps you can take to handle changes in market direc-
tion later, but understand up front that:

You do not need to be fully invested in the stock market at all times.
Make money when the market is trending up—and protect your prof-
its when the market starts trending down.

Sounds obvious, right?
But the reality is, many people pay no attention to the overall market
direction and just blindly “buy and hold.” That’s because they don’t under-
stand how market cycles work. They don’t realize that when the overall mar-
ket trends down for an extended period, about 75% of all stocks go down
with it.
Investors with a “buy and hold” strategy may make money when the mar-
ket is going up, but they often end up giving it all back (and then some)
when it goes down.
It’s time to step off that roller coaster and start using buy and sell rules
based on how market cycles actually work.
You’ll learn how to do that in this book:

• The Buying Checklist pinpoints the best time to get into the market.
• The Selling Checklist shows you when it’s time to lock in your gains and
move to the sidelines.

Big Rock #2: Focus on Companies with Big Earnings Growth
and a New, Innovative Product or Service.
Big, accelerating earnings growth is the #1 factor to look for in a stock. And
it’s innovative companies with game-changing new products that generate
that type of explosive profitability.
That’s why the first three CAN SLIM traits are so important: