Review: The Wallstrip Edge by Howard Lindzon
For the last couple of years, Jeanine and I have included, “Open an online brokerage account,” on our list of goals. Year after year, it’s one that we haven’t been able to check off the list – partly because I wasn’t that interested. But after reading this book in January, I suggested to Jeanine that we should finally get serious and do it – so in March we opened a joint Schwab account.
We funded the Schwab account with equal amounts of money and voila, we were online traders. It’s only been a few months and we haven’t done any selling; just the buying part. Surprisingly, Jeanine has taken to the technology and market with a keen attentiveness and is leading the way for us. I still hear a little voice (and it sounds a lot like my long time financial advisor) telling me that individual investors shouldn’t be buying individual stocks. This is why my portfolio is made up of index funds and the numbers are boring to me – another reason why my advisor manages this part of my portfolio. (Note: I like real estate and take a more active role in managing these investments.)
Buying individual stocks feels a bit like placing a bet on the roulette wheel. There’s a thrill factor to it which is probably why Jeanine has taken to it. But I’ve quickly learned that it doesn’t have to be like gambling. I read the book that keeps it simple when it comes to buying individual stocks.
It’s called The Wallstrip Edge and the author, Howard Lindzon is one cool dude. He uses a unique trend watching philosophy that helps investors determine when to buy, how long to hold and when to sell:
Anybody can buy a stock, but you also have to hold the stock while it rises in order to make money. It takes confidence in your own judgment and discipline – your understanding about the company and its catalysts – in order to ride the ups and downs of a stock’s price as a trend plays out. Trend following is not for the faint of heart.
He warns that there’s a lot of “noise” on the financial new channels. Don’t pay attention to it. Instead focus on web content that you pull in instead of the content that’s being pushed to you through traditional media.
His secret formula: following stocks that are trading at 52-week highs:
I know you want more and I would be happy to give it to you, but that’s how I start and end my search for stocks. All the great stocks show up here, so why look anywhere else? The truth is, you would have participated in RailroadMania, NiftyFiftymania, MicrosoftMania, YahooMania, OilMania, and GoogleMania if only you had been watching the all-time high lists… If you want to make money trend following, you need to stop hating the manias and learn to embrace them. There are always trends at work in the stock market. If you watch the all-time-high list, you will be looking at opportunities from a database of companies into which money is flowing today.
The rest of the book looks at this strategy in fine detail. So in case you’re wondering… yes, this “simple” strategy still fills up a 200-page book, but it’s a strategy that finally made some sense to me. I really loved this book!
If you’re interested in buying individual stocks, then read it. If you’re interested in a free copy, I have an extra one to give away. Just tell me why you want to win it (you gambler, you!) in the comments section below. I’ll pick a trend watching winner on Wednesday.
Image credit: HowardLindzon.com.