I’m going to write a book about the stock market. Why? It seems that everyone with a copy machine or the ability to put out a web site has a paid newsletter or internet site on how to make money in the stock market. My Yahoo e-mail is loaded with offers for stock tips for a monthly fee, and they seem to be growing at an exponential rate. I can hardly separate that stuff from the usual amount of internet Spam. The market is already too crowded there. The magazine sections of the bookstores are also loaded magazine-tabloids with stock investment ideas to “make money now”. The general theme seems to be, “Don’t miss out. Hop on the Bull Now!” Again, it’s a crowded market.
But I was surprised to see that the book section was pretty much free of this kind of soft covered garbage that populated the shelves during the Christmas season of 1999. Who could forget, Dow 36,000 and Rule Makers Rule Breakers? Now there is only a whole shelf of Suzie Orman. However, its not really clear to me as to why there are no books tailored for the current bull run; although my wife suggests that literacy is not a prerequisite and may even be a hindrance to doing well in today’s stock market.
In spite of this, I’m going to fill this void while making an honest buck in the process by writing a book. Who knows, with some luck, I could be the next Wade Cook. Of course, one week is not nearly enough time to produce an entire book unless I just write down what pops into my head without letting thought slow me down. So I am attempting to put together a table of contents and outline here and get the final book on the shelves by Christmas. It may be a last minute stocking stuffer. OK, it might be a bit late, but if my readers are right, and the rally continues because of underlying interventional forces in the stock market, sales should be brisk through the presidential election. (Although I disagree.)
Here is a working outline of the book:
Chapter 1 – Forget Fundamentals, “Just Do It”. This implores the readers that we are in a new and different type of bull market not seen since 2000. This time its different. There is a whole new set of criteria for determining stocks to buy and flip. The chapter will contain anecdotes about people like my dentist who, with are almost half way to recovering their losses in tech stocks. And recovery of the other half is just a few months away. The purpose of this chapter will be to give investors confidence to get their feet wet in the stock market again, and make them understand that stocks are like rare coins or paintings, where an illusion becomes real. P/E? Not important. Dividends? Never mind? Balance sheet? Are you kidding me? Profits? Yes, these are important. Its good to have some pro forma profit, but how much profit is unimportant. And pro-forma profits are (once again) as good as the real thing. The rational and effectiveness behind the greater fool theory will be explained and emphasized.
Chapter 2 – Greenspan Will “Put” Me Safely Into Retirement. I will present the case for the Fed refusing to allow the stock market to crash. The system has taken care of us baby boomers throughout history, and today is no different. Greenspan is described as the all knowing and powerful one. After all, if he wasn’t as brilliant as Wall Street makes him out to be then why does he get away with talking in tongues? This describes the tools possessed by the Fed to keep the stock market party going, while ignoring the long-term health of the economy, and ultimately the stock market. What tools are left? They are liquidity, talk, and unconventional methods; and he is running out of liquidity. The chapter will be about 15 pages and you should know that it would take you “a considerable period” to complete reading it.
Chapter 3 – Buy Stocks Late Wednesday Afternoon and Sell Them on Thursday - An Investors Guide to Trading on Economic Data from the Government. This chapter discusses the plethora of government economic data and assures readers that all economic data will always be positive, or spun in a positive manner. Key trading parameters will be discussed such as unemployment rates, weekly jobless claims, and GDP statistics. For when traders are really bored, there’s the consumer confidence index (a function of the stock market), and Empire State Survey (fundamentally meaningless, but a good trading vehicle). Buy before and sell into the positive economic data from the government.
Chapter 4 – Core Portfolio Management Made Easy. This chapter discusses the blue chip stocks that should form the core of any portfolio in today’s market. These consist of Yahoo, Amazon, Ebay, Cisco, Intel, and Dell. Composite P/E? Dividends? These don’t matter, remember! Options for employee compensation? You bet. And lots of them too! So what. Share buybacks? Buybacks are always a good thing. Shareholder’s equity? Not important. Celebrity CEO who makes a lot of nebulous positive remarks to the press? Very important! Remember, this time its different. These are your “one decision” stocks.
Chapter 5 – Watch A Lot Of TV. Investment ideas in this Bull Run are right there on your TV set. Go find them! Listen to CNBC guests. Listen to perma-Bulls such as, Louis Rukeyser, Louis Navellier, Abby Joseph Cohen, and the other guest analysts trotted out on CNBC. Get stock tips from Fox TV, and Bloomberg also. If you like Krispy Kreme donuts buy the stock! Did you get a good salad in McDonalds? Buy the stock. Free shipping on Amazon.com? Buy the stock. Like your computer? Buy more Intel and Dell. This will be kind of like the Peter Lynch principle from hell, which works amazingly well in this market. “Buy what you think you know.” Why do any research on businesses and useless fundamentals, when it is all there for you in the comfort of your den or at the mall?
Chapter 6 – (NO) Great Expectations: The Importance of ‘a Penny’. Selecting companies that earned 1 penny is important in today’s stock market because if they make 3 cents next quarter (pro forma), it will result in a headline of, “Company ‘A’ Increases Sequential Profits by 300%”. A good headline is very bullish in today’s stock market. The techniques for finding companies that made 1 penny (pro forma) are described. The chapter also describes the importance of finding companies that “manage” earnings guidance so that they may always beat-by-a-penny. Whisper numbers and low and beatable expectations are also discussed.
Chapter 7 – Fads Fads Fads; From Nanotechnology to Macrovision. Discusses the engines for stock market growth. Stun guns, weapons, Atkins diet (eggs, and nuts), Spider Man, Generic Drugs, Chinese Internet, Coach bags, clothing fashion trends, hot kids computer games, flash memory cards, home builders as growth stories, savings banks as growth stories, consumer lending companies, anything with silicon or silicon chips, anything with the word “laser” in it, and the newest restaurant concepts. These babies are going up! Hop on board.
Chapter 8 – Core Values in Unlisted Pink Sheet Stocks. This is one of the most undiscovered gems of today’s stock market where stocks go up 50 to 100% in a day. It doesn’t have to even be a real company to trade as an unlisted company. Who cares? This chapter gives investors a basis for choosing and flipping these worthless pieces of paper for overnight profits obtained from the next person in line.
Chapter 9 – Conjugate Me a Loan Sidney. The basics of setting up a margin account, and also borrowing against your perceived home equity to speculate in the stock market. Other creative ways of borrowing your way to sustainable wealth are described.
Chapter 10 – The Really Smart Guys are All Senile. The stock market views of legendary and currently bearish billionaire investors such as Warren Buffett, John Templeton, Bill Gross, George Soros and others are outlined and reflected upon. All of these so-called experts are dismissed as senile.
Chapter 11 – Houston We Have a Problem. This chapter provides investors with a strategy for getting the heck out while maintaining paper profits and turning them into real cash. Be the first one out the door before reality hits and someone important finally yells “FIRE”.
Chapter 12 – Putting It All Together. Summarizes the first 11 chapters in the form of a cookbook for those without the attention span to read the entire book. Sample portfolios. Readers can then get back to watching Fox TV.
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