Page 922 - How to Make Money in Stocks Trilogy

Black Belt Trading: Investing Like a Pro 171

stock selection. David also managed several investment portfolios for
William O’Neil + Company.
David worked with Bill for nearly 17 years, and though he respected Bill
enormously and had learned an incredible amount from working with him,
he felt it was time to “stretch his wings,” so he started his own hedge fund in
July 1998.
David feels his longevity as a professional investor stems from the fact
that he controls risk as much as possible and doesn’t let losses get out of
hand, noting that “if it is your own account, you might be able to take more
risks, but not when you’re dealing with people’s retirement money and their
family wealth.”
He likes investing in retailers because “you can go into a store or restau-
rant and get a good feel for them.” David usually trades around a core posi-
tion in a stock, so if he owns 20,000 shares, he may cut that down to 10,000
if the stock is basing or the market is pulling back and then “ramp shares
back up as the stock begins to take off again.”
In recent years, he’s had success with stocks like Chipotle Mexican Grill,
Apple, and Caterpillar.

Know the Story
The key factor that will help you stick with a winning stock is to make sure
you know its underlying story. What is making the company successful?
What are the key concepts that will keep it highly profitable? Will the com-
pany go from having 250 stores to over 500 in the next few years? Are they
producing a product that is in big demand?
David feels that even if someone has another job, it’s important to have a
trading account of some kind: “Try to put in a half hour of study each day
and begin to put the CAN SLIM principles to work. IBD does a great job of
highlighting the best stocks in the best groups. All you need are one or two
great stocks in a year, and you can achieve some outstanding results.”
He says that “CAN SLIM Investing is the fastest way to make money in
the stock market, but the key is to have discipline. There are some straight-
forward rules that you must follow.”
David is passionate about the market and investing, “and this has taken
me through some difficult, challenging markets.”
He also adds that while it’s great to make money, there are other things
that are more important: “Faith, family, and friends are the most valuable.
Keep it all in perspective.”