Superperformance stocks: An investment strategy for the individual investor based on the 4-year political cycle 超级强势股 Richard S Love" W+ b* Q1 U1 }' g8 x/ k( ?
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8 j% K0 |! H; W Contents
+ u2 i6 e% Y0 e C# M0 s/ ? Parti
1 Z0 t' g% z# X4 q The Search for a Successful2 B, i) p. K, b" P/ ^+ h* Z
Investment Strategy
+ A$ p( e2 Z3 } Chapter 1 Buy to Keep or Buy to Sell? 3
. O; r/ ]- k4 T$ M2 U The Concept of Growth 4
! ~: y: g2 z' M$ y8 h1 d The Cyclical Approach 5" j4 X! x9 ?7 G, v
Evaluate the Political Climate 78 J" ~/ A6 v9 S
Is Institutional Investment Strategy Changing? 9, M3 |8 F/ q5 H; Q
Stock-Price Cycles 10' W2 D& z+ l/ y# K
Reading the Long-Term Charts 11) ^, [3 w& P$ {6 y8 i
Being Wrong Can Be Painful 157 `8 |7 J! d' B2 q. e r% e& B& _
The Disadvantages of the Buy-Sell-Buy Approach 16( z1 r! S& X4 B
Part II
G9 b, w! }' l% e; i3 `1 \ When Should You Buy Stocks?
& H T8 M6 d" `/ D Chapter 2 Business Cycles 21
4 S: e1 y/ ?. Y, i+ V Chapter 3 Washington Policies 25
, Z/ I- j; y" z$ Q Economic Control Through Fiscal and Monetary
$ }3 e2 K. }! b5 C! A/ j7 A6 u Policies 26' J& \/ K3 D! W T! s; D% Q' Y/ v+ c
Follow the Political Cycle 27( W2 F" z7 [" \, V; V
Inflationary Policies 28
+ C0 A5 ?# ^+ C( o# a- k8 } Economic Planning vs. Political Reality 30. y$ a* Q4 u4 d; M" C
Federal Monetary Policy and Stock Prices 32
( ~# F2 y' B8 I3 x* X Do Not Be Misled by Short-Term Monetary Trends 33
! U: ?* u3 T3 ] Chapter 4 The Political Cycles 35
3 p/ \: H: s3 ]& k The Biggest Boom and Bust, 1927-32 39: H) {* e1 @) Z
The Roosevelt Recovery and Recession, 1932-38
$ {- Z) {& Z: ^0 e! N World War II and Immediate Postwar
e' P" @& d* @ Cycle 1: 1949-53
; k- V8 A2 Z( z) \3 ? Cycle 2: 1953-57
. r( z" c4 [. s, z, m4 u CycleS: 1957-600 K- H1 r5 w- `2 g+ @! H; I4 x
Cycle 4: 1960-62
' t3 ?7 t, d+ k2 ?* G x$ C Cycle 5: 1962-66
$ L& ?& {- w2 l9 U/ n Cycle 6: 1966-70% e/ M5 K# M, K
Cycle 7: 1970-74' T3 X7 s5 v/ |5 g" g# q
CycleS: 1974-4 f8 \8 f0 u# \- P3 N
Summary of the Stock-Price Cycslei
- j: E& {5 S) o# g0 d( j Chapter 5 Look for Low Risk" J; P- Y5 C O
Buy During the Selling Climax
! R- J; \. y$ M Trade With the Market's Primary Trend
8 O: S: p6 h7 T' p* t Part III: g& G5 Z3 U1 ?
Which Stocks Should You Buy?
, `. u( I, Q/ ^2 f' e! `, ^ Chapter 6 Safety First 67/ B2 S9 u/ J0 h w5 N" t( g. h
The Biggest Also Decline 674 j$ e! n; E9 L
Price Trends of Income Stocks 680 E0 {+ O! [0 G9 K9 ]+ ^2 h
Most Stocks Are Price-Cyclical 71
! w, l0 s4 @8 @- G) Y: s Buy for Large Capital Gains 72
' H! B, E/ n+ J( C/ @: v8 X A Superb Company Does Not Necessarily Have a
' G$ W6 ?: t# _ Superb Stock 72/ M1 h; }9 _* y( z9 l& D: I
Chapter 7 Superperformance Stocks: The Record 75
/ |& f( ^" v/ h4 O8 v E Features of Superperformance Price Action 77# d" z) y% H* G& }7 d; ^9 w* S
Superperformance and Company Earnings 77
5 E( N8 W# @, w7 C0 l Superperformance and Company Size 79; R1 J2 W% Q; N) @
Superperformance and Subsequent Stock-Price
1 U8 L, U6 u' M" l/ m% ^$ K Action 80
" o% K6 K) ?& O6 C" B: r Characteristics of Superperformance Stocks 81" g- s5 c. g9 u: p
Chapters Look for Price Volatility 83
6 W: s+ O/ y9 N L Stock Prices Reflect the Law of Supply and" x0 n% F8 n! Q1 k) @
Demand 84
8 e# e! j2 Q3 q8 j0 v% F$ x A Tale About Volatility and Timing 875 ^# H! ?3 O& f& E& q" J' `
Price Distortions by Stock Exchange Specialists 89
; E8 o: r) j$ U* k H8 p Look for Rebounds 91
( z8 g7 g. x0 L! m8 _( D! Y: ` Which Stocks Rebound? 92! L( j- H4 y* D5 j; ?) x
Emotional Selling and Trend Following 94 O3 U! C. U' b% @" `
Leverage 96( F9 t' E! x5 ]/ A; ?4 ~5 e) |
The Dangers in Leverage 99
+ o# y# ], p/ ~7 ^/ j; b6 F Leverage in Low-Priced Stocks 100
& s K4 r% H( T( r6 J Leverage in Warrants 101) ]: k. H4 Z& f/ j' F) q" J
Chapter 9 Look for New Earning Power 105
. M; Q3 f( ?7 l3 _) A Change and Stock Prices 105
5 l) _% h) a4 g, I1 y; ?4 {2 r+ v% t Change Resulting From Discoveries of Natural
$ {1 M0 O( j- o0 G) F Resources 107
1 k3 p5 E0 k0 p Change in Government Policies 107
# h* f% o% d. l2 b$ S; I1 m* { Technological Change 109% x, v- e5 W/ ]( P. Q( q0 Q5 z, X
Growth-Stage Companies 110
- M$ [* @; ^' k7 Q Mature Companies 112. I. v2 w) n* E4 c# k
Use Caution When Selecting Growth Stocks 114
& v3 [; b7 f. p" U+ H Good Management Is Vital 115" [) @5 U/ C. _. _ ^: W; v
Turnaround Situations 1153 A: o" Y! ~% e8 ?; o
A Comparison of Two Growth Stocks 116
# t. O7 v$ n8 k$ _, |; q' Y8 I Anticipate Growth 1198 d( Z3 j$ r5 U3 r, q9 b
Earnings Explosions 122" b# }9 E- V$ V6 g' ?4 F( ]3 C
Be Skeptical of Reported Earnings 124; \* c& r) X3 f& w0 \3 _: @; ^: [6 p
Reported Earnings Depend on Accounting) \& d+ K, Q- |& Z6 O
Procedures 124+ j; o. r& d# s% _% |0 ~7 m/ e
Higher Earnings Are Usually Anticipated 125
7 g& C e8 K2 v- C- |+ C( x9 W% ?) B p Earning Trends Affect Superperformance Price$ d: L9 h% z- F3 e4 Q- ~
Action 125
. ?9 z$ P4 J9 y9 v3 Y, C The Role Future Earnings Play in Stock Prices 126
$ z% f" ^0 P9 G1 Q) n& d# k2 j0 m Evaluate Reported Earnings 127, U! ^) V& w/ B3 _
Chapter 10 Look for Expandable Price/Earnings, N) [- O% j X0 M# I
Ratios 129+ `8 a( d [ @9 |. w9 j( ^
Psychology and Stock Prices 131
; R* v* ?: J, ?* Z: j- c, A& g Establishing Stock Values 132/ L& V4 V* e- m* ~' p
Problems in Establishing Values 134* g' V5 \; v3 | D v! {* |' f
Market Price vs. Inherent Value 134* P0 ]5 r6 q: b
Market Price vs. Dividends 1383 ]4 y4 \9 w( X% e$ N' j* k
Estimating Price/Earnings Ratios 139
4 Z/ g/ g; l K2 C: H( y8 v The Influence of Price/Earnings Ratios 1415 _, r- `! l. K
The Ideal Situation 1476 E; h0 M* p- v% T5 x
Chapter 11 Look for Good Sponsorship 149
9 r1 ] m) o4 }1 X5 T0 s& Y An Example of Sponsorship 151
6 @" ^8 U' l+ T* G1 o Sponsorship by Institutional Investors 1525 ~8 k) e+ Z' u9 W# `' k+ d3 x; R
Trend Following 161+ i H. @" G. m1 _7 l
Spotting Trends 162- C7 p* u8 E! y& _' N
The Sequence of Trend Following 1638 l, ?, ^! k7 d
News, Publicity, and Stock Prices 164
6 @4 O+ V, E3 Q1 d Buy Stocks You Understand 167
7 k; T7 \ w4 k, Z Part IV2 @6 v# F8 a2 b) H
When Should You Sell?+ C# u5 Q) Y2 t) {! g% Z7 h9 A
Chapter 12 The Timing Rhythm 171" [- D- E% u2 b8 r
The National Economy and Stock Market Declines 173+ L, w' O% S8 D
Presidential Elections and the Stock Market 174* L5 m2 f, s4 s: y
Watch Out for Surprises 176$ ^- z) j. m w! E9 u& `
To Hold or to Sell? 1788 p# o; F( D+ |
Be Alert to Federal Policy Switches 179 r0 D7 B0 S K- ?/ z) ]
A Possible Exception 180. W$ E `/ p+ i! ?. V8 C( d ?
The Pricing Rhythm 182! r9 |1 x0 H1 |' v! @# d" \$ m
A Big Problem for Investors: The Stock Exchange* Z4 r1 a7 f+ ?7 f0 U" M% L
Specialists 183) |3 y2 ]9 O7 T
How Specialists Operate 184
$ d( V* i3 E! r' Z8 z* Z Do Call Options Depress Stock Prices?% B \1 z, X+ B! o* _' I; l' M8 g
Remember the Political Cycle
* B" ?5 N2 ^4 x" T: Y4 y: W2 J" T Declines in Individual Stocks vs. Declines in the* i. X0 r$ u4 j u$ Q
Stock Market9 M }! s# v3 W
Watch for the Warning Signals: g! F5 C& _3 m+ H* Q# ~+ r& k4 Z! B
Chapter 13 Selling Short4 ]2 C+ w& A2 W+ [# k
Timing a Short Sale
0 G2 {5 `9 \/ L! Q The Ideal Time to Sell Short3 k7 y' o/ w$ K n" M) S
Patterns of Boom and Bust in Real Estate0 i8 N r$ p# E" {& ]9 {
Profitable Short-Sale Opportunities Have Been
' t1 A! d+ f( o- g* M Numerous! }- u, D6 B' I- @. z, v
Select Short Sales Systematically
! R3 G$ }5 C+ k! ~! y; v Short Selling by Professionals
4 w9 ` r. W: u1 f; S Covering Short Sales1 ]" R" ^7 B6 {8 }0 E0 L9 u
PartV
3 r4 P* g4 u$ x4 w; ~& a The Strategy for Success' B5 P. ]2 o7 A& r
Chapter 14 Sources of Information and Ideas
! o! d5 \# P& N- x6 p Publications to Review Regularly4 s) [1 b0 i$ D4 s- Q
Learn to Recognize the Cycles
3 }6 k, g% ]8 @( C8 e1 e Look for Potential Price Movement( Y) `0 Z0 A, `5 {3 @/ c7 @% x
Individual Judgment Is Crucial for Success- @- I1 z+ n9 H9 c, o P. v& s. x
Chapter 15 Points to Remember: B2 E7 B: V( U; R/ a
When to Buy Stocks
# _0 T# Z) v, `! e. p What Stocks to Buy6 M3 x9 R: k, E& J& f( n, |
When to Sell Stocks7 v! u d0 c! g' j! w6 O% Y
Appendix A: Superperformance Stocks, 1962-744 Z) I& s6 O4 M/ o6 E. Z! E2 k2 e; w0 W
Appendix B: Superperformance Stocks,
# l7 d: }6 _# x October 1974-October 19769 z3 X- ~; ~6 K6 ?, |* G, k
Charts+ y1 k: i$ W1 W. g
1. Presidential Elections and Stock Prices 12
. a* u6 M, \4 W; E# ? 2. Ford Motor 132 w+ }& m2 V! q! S
3. Metromedia 14
0 M) P0 O5 i5 _& w5 `: v5 W% m# a& H* y# h 4. Federal Budget Deficits and Surpluses 29% _8 K+ v4 h0 M1 F [5 V
5. Durations of Stock Price Cycles 37
A# X1 v0 K: ~! o 6. United Financial Corporation of California 63' h0 x2 i/ t7 O9 c8 P+ Q* G! |
7. Dow Jones Utility Average 694 u- X) ^0 o9 D( ^, e. `% @ P# {0 C
8. American Telephone and Telegraph 70" N, O9 v9 c7 }0 ?
9. Skyline 78
+ }6 G; Q5 ]' r; x& Q5 Z* U/ G 10. General Motors 85
6 e: {& g, q1 m+ h+ [0 @ 11. Jack Eckerd Corp. 86
# v9 J# {/ u6 `) d g* K 12. Natomas 95
?9 @1 u z& ^' Y7 R; @* o 13. Trans World Airlines 98+ Q: p) O# w) y6 f" g7 F! d+ d
14. Holiday Inns 102
9 e' ?9 i# c/ d 15. Gulf & Western Industries 103
- e9 W1 c. \9 K5 j" s$ o 16. Vetco Off shore Industries 108, A3 Y/ d: W2 i) ]# D# |- I
17. Bausch& Lomb 111% J% ~5 {/ |4 u" k5 z
18. The S-Curve in the Dow Jones Industrial: T. f& x! h* {" r
Average 113
5 V4 b* C/ `( Z4 b4 R 19. Chrysler 117
, S: z7 I$ l0 ]1 ^+ W- t; n& V 20. Polaroid 120
8 F/ t; V1 h! S. z0 B. T/ {6 U 21. Kresge 121# a2 a; g# [0 X4 @6 \. V# R( M
22. Syntex 1239 |( P/ ]3 g, j; ]
23. McDonald's 142
8 A- p1 b& p- x( h( n 24. International Flavors and Fragrances 143
' M# B! ^+ X8 i/ q" R, A 25. International Business Machines 145' K- i) F$ \. {8 m3 ~9 Y
26. Du Pont E. I. de Nemours 146
" {1 S# s0 O! ~- Z+ _( `0 { 27. Athlone) N6 x" Q4 T! c1 \
28. U.S. Steel
7 z$ K! j) f- g! K' I& y" V 29. Burroughs8 T2 A! Z- K' t$ ?
30. Xerox
$ W7 ?# G: r1 i. q$ i% a& ~ 31. Winnebago Industries7 ~7 q+ F# Q5 T5 p+ R9 J4 C _
32. Outboard Marine
+ \- f; A( R, {( H: P 33. Avon Products" m) _. ^ d$ g4 s5 F% w; g* A
34. MGIC Investment
( K8 [" r8 i h1 X7 e' S 35. Grolier
9 f4 w1 D% }. f) ~6 }* u( x 36. Rite Aid
/ }# q/ ]% Z F* _) h* M9 Q5 c 37. Eastern Airlines
6 o3 @* `; q5 H6 G# N 38. Thiokol5 R# \- Y4 y9 R6 O7 X" w
Tables6 G. |7 b M- N! z, J0 i$ z6 F
Table 1. The Stock Price Cycles 37
9 U5 y$ d3 g4 G- [! _0 Z Table 2. Presidential Elections Compared With Beir
* a) T" K/ Q p: u7 X$ t Market Lows and Bull Market Highs 56* {6 @$ V" D- R; h$ k. N
Table 3. The Disparity Between Book Value and+ y3 E J( M0 {9 D' e& K ^
Market Price 135
- x! J6 H" K4 E" p Table 4. Book Value Lower Than Market Price 136
& }1 S" G9 B1 Q; X1 n/ Q0 N Table 5. Book Value Higher Than Market Price 1377 h: B0 C( h( x; T3 |
Table 6. Accumulation of Xerox by Institutions 157
" ?8 C7 [2 i2 J7 O/ \+ I# S1 @# p! i5 Q; \: n& S/ W+ L
, j$ c% A. X& M# V* m# `. j9 [7 L2 K3 k# ?) D( T
0 t! r4 q% E2 c; }- ~- \
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