Page 293 - How to Make Money in Stocks Trilogy

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• C HAP T E R •

N = Newer Companies,

New Products, New Management,

New Highs Off Properly

Formed Chart Bases

It takes something new to produce a startling advance in the price of a stock. It
can be an important new product or service that sells rapidly and causes
earnings to accelerate faster than previous rates of increase. Or it can be a
change of management that brings new vigor, new ideas, or at least a new
broom to sweep everything clean. New industry conditions—such as supply
shortages, price increases, or the introduction of revolutionary technolo-
gies—can also have a positive effect on most stocks in an industry group.
In our study of the greatest stock market winners, which now spans the
period from 1880 through 2008, we discovered that more than 95% of suc-
cessful stocks with stunning growth in American industry fell into at least
one of these categories. In the late 1800s, there was the new railroad indus-
try connecting every part of our country, electricity, the telephone, and
George Eastman’s camera. Edison created the phonograph, the motion pic-
ture camera, and the lightbulb. Next came the auto, the airplane, and then
the radio. The refrigerator replaced the icebox. Television, the computer, jet
planes, the personal computer, fax machines, the Internet, cell phones . . .
America’s relentless inventors and entrepreneurs never quit. They built and
created America’s amazing growth record with their new products and new
companies. These, in turn, created millions and millions of new jobs and a
higher standard of living for the vast majority of Americans. In spite of
bumps in the road, most Americans are unquestionably far better off than
they or their parents were 25 or 40 years ago.

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