Wednesday, June 10, 2009

Book's Gist: The Unemotional Investor

UNEMOTIONAL VALUE APPROACH - Use this + Unemotional Growth if bullish
1. Identify 10 highest yielding Dow Stocks
2. Rank the 10 stocks in ascending order by stock price
3. If the stock with the highest yield = lowest-priced out of the 10, eliminate from list
4. Buy the 4 lowest-priced stocks remaining on list in equal-dollar amount
- Variation
Buy 2X more of the 1st and 2nd cheapest stocks Vs 3rd and 4th
ie - 2: 2: 1: 1 dollar amount ratio for 1st, 2nd, 3rd & 4th
5. Hold for a year, revalue again

UNEMOTIONAL GROWTH APPROACH
1. Get 100 Timely Stocks
2. Get EPS (earnings per share) & RS (relative strength)
3. Sort stocks in desc order by EPS, then desc RS
4. Select top 5 - 10 & buy in equal dollar amout
5. Revisit every month

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