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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
20 Rules For Investment Success
There's no certain way to predict which stocks will go up, but it's possible to identify what conditions lead to their advance. These rules are based on the characteristics of the most successful stocks before they delivered major price runs.
There's no way to predict which stocks will go up, but it is possible to know what conditions lead to their advance.
That's the aim of the 20 Rules For Investment Success developed by Investor's Business Daily and its chairman and founder, William O'Neil. Using computer analysis going back several decades, it was possible to single out the characteristics of the most successful stocks before their major price runs.
IBD's 20 rules are a synthesis of those findings. The characteristics, in fact, have changed remarkably little over the years despite one of the longest bull markets in history, the worst bear market since the Great Depression and lots of changes on Wall Street.
In many ways, these rules confirm some tenets of stock investing, such as the power of earnings growth and blockbuster products. But in other ways, the rules defy long-held beliefs. For example, price/earnings ratios and dividends are written off as predictors of future performance.
To be sure, most winning stocks stop short of possessing every trait outlined. But the better a stock matches up to the criteria, the stronger is its potential.
If there's a way to quantify the success of these rules, it's probably found in The IBD 100 Index, which tracks the performance of stocks chosen largely for their adherence to these principles. Through Thursday, August 24, the index was up 122.4% from its inception more than three years ago vs. a 39% gain for the S&P 500 over the same period.
20 Rules for Investment Success
BONUS: Follow Sell Rules To Avoid Weak Market
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