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Reluctant Millionaires

Strategies For Wise & Effective
Stock Market Investing and Trading

by

Brian L. Nowell, Ph.D.



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Preface

(Don't Skip This !)



Stock Market 'Language'

The Stock Markets, those who work in them, and those who invest in them share a professional 'language' which is very important for you to learn if you want to be a wise and effective investor/trader. Their variation of the English language has unique (and common) words/phrases with specific and unique definitions which tend to be modified over time. And, I have found that different stock market participants use the words of this professional 'language' somewhat differently from each other. Unfortunately, various individuals who are associated with the stock markets in one way or another use this professional 'language' either incorrectly or sloppily.

Needless to say this stock market 'language' initially presented quite a lot of difficulty to me as a beginning investor/trader. And, I certainly have not mastered it at present. So , my advice to you is to learn as much of the words, phrases, and definitions as you can stand in the very beginning of your stock market education. I have included a Glossary of stock market words, phrases, and definitions in the end of this book to help you. There are also many other library and On-Line sources for the same material. Don't' however spend too much time with the Glossary in this book initially so you can have time to learn some other more enjoyable and financially rewarding things. At some points in the text of this book I will also include definitions as needed to make the information being discussed understandable without reference to the Glossary. Be careful to be sure that you really understand what is being said or implied when you use this language and when you listen to it from others who use it. Remember that mis-communication in this language can frustrate the communicators at least and can cost you lots of your hard earned money at worst.

Strategy

I use the word strategy in a very specific way in this book and in my stock market classes. By strategy, I mean a set of rules which define a certain type of psychological investing or trading situation which allows the user of the strategy, who follows its rules carefully and completely, to both predict future stock price changes and to know how to make money from that predictive ability. There are 12 or so strategies which I teach in my classes, but I will only have room to present 9 of them in this book. Some of the strategies are more conservative, some are moderately conservative, and some are more aggressive. Each strategy will be presented in its own chapter and will include the rules, where/how to find stocks to use the strategy with, and one or more examples (stock charts and explanations) of specific stocks which fit each strategy. Look in the Table of Contents for the locations of each strategy chapter.

I always start with a strategy, because it gives me large predictive power before I have even selected a stock to invest in and therefore before I have done any of the useful and necessary analysis of the selected stock which gives me additional predictive power. If the strategies are not clear to you or do not fit your preferred type of investing/trading don't use them. I encourage you to attend some of my classes when they are being offered near you, because that will help you understand how to better use these strategies to make money consistently in the stock market. See Chapter 31 for more information about those classes.

Aligning The Planets

This may sound like something from astrology, but it is not. It is actually in reference to modern discoveries by astrophysicists that each of the planets in our solar system have complex energies which actually affect the events on the other planets and the sun. That affect is stronger when two or more of the planets are lined up in a row. It is suggested that larger or more dense planets have a greater affect than smaller or less dense ones. It is even hypothesized that the alignment of the planets (and thus their complex energy fields) actually affects human behavior in direct and indirect ways. I use the phrase "Aligning The Planets" to mean using major and minor influences on and predictors of stock price changes together to get a stronger predictive effect. If one stock market planet gives 20% predictive power, another gives 15% predictive power, a third gives 35% predictive power, and a fourth gives 18% predictive power about a certain stock price change, the combined predictive power equals 88% when the planets are used skillfully together.

In my classes (see Chapter 31 which give dates, agenda, and location of classes) I teach about 23 major and minor predictive planets. Look in the Table of Contents for Chapter 3, which explains the basics of how to use/align/get information on the 7 generally most important planets. Although, I will introduce and tell how to use the most important 7 of them, It is highly important to learn more about those planets and get very comfortable in using their predictive power. The planets are as follows, with the most important 7 listed first. Some have several variations as is noted in parenthesis, and the 7 most important are prioritized (top to bottom) for importance of influence on or prediction of stock price:

  • News (9 Types)
  • Indexes (DJIA, S&P 500, NASDAQ Charts, etc.)
  • Sector Rotation (Macro and Micro)
  • Institutional Buying/Selling
  • Fundamental Analysis/Competitor Comparisons
  • Technical Indicators (Moving Averages, Stochastic, MACD Histogram, TRO, Bollinger Bands)
  • Psychological-Opportunity Strategies and Strategy Interactions
  • Chart History
  • Expert Advice/Created Psychology
  • Timing Strategies
  • Inside Information, Investor Relations Department, Rumors
  • Short Selling
  • Levels of the Market
  • Intuition
  • Attributes of a Great Company
  • Insider Trading
  • Competitor Conditions
  • Company Characteristics
  • Industry Characteristics
  • Volume Rules
  • Earnings Reports
  • Analysts Ratings
  • Chart History
  • Market Sentiment


If you need additional help in understanding the planets and how to use them most effectively, I encourage you to attend my classes when they are offered near you. Or, at least study those topics and think about/observe how they really affect the stock prices of the companies which you are interested in trading or investing in.

Order of the Chapters

I have arranged the chapters of this book so that a chapter will present some new information explanations and charts if appropriate and the next chapter will present a strategy with its explanation and charts. I hope that this order will be useful to you. I have attempted to put the most fundamental information in respect to the planets, strategies, and techniques I teach in my classes in the earlier chapters so that the information and understanding you need is available as early on as possible. However the material included in this book should be able to be read beneficially no matter where you start reading if you already know some things about the stock market or my classes. Enjoy and prosper.

Possible Outdated Information and Other Errors

There is always a large time delay between the writing and the publishing and distribution of a book. Sad to say, but that is true for this book also. The problem is that some of the information in this book will be outdated when you read it. I can't resolve that problem, but at least I apologize for any problem that creates for you. Remember to carefully check with other sources anything in this book which might be time sensitive before you act on it. Also some errors in the text probably will escape the editing process. Sorry about that. And finally for any errors which I teach and don't realize that they are errors, I am sorry. I hope to better knowledge as time continues, and you should know that I have done the best I could to provide you with the best information possible given my very human limitations. Always use as many good sources of knowledge and information as is practical for you to evaluate and confirm the assertions I put forward in this book. Always check the strategies and practices out 'on paper' before you actually risk any money, until you have arrived at your preferred level of confidence in them. Safe investing/trading is necessary for successful investing/trading.

To Internet or Not To Internet

I am an obvious advocate of using the Internet to gather stock related information, to get investing/trading knowledge, to align the planets, and to do most of my individual trading. I have gotten amazing information, help , and financial results from using the Internet for my trading and investing. If you are not comfortable about using the Internet, I recommend that you take reputable classes on how to use it effectively. If you don't own a computer, learn about the current affordable mid range personal computers (with a modem) (approximately $1,000), buy one at a reasonable price when you can afford it, and get comfortable using it at home. If you cannot afford a computer, your public library most likely has some for public use which are already connected to the Internet If you decide to never use the Internet for your investing, you can still use many of the strategies, techniques, and tools described in this book, through a good discount or good full service broker.

Investor or Trader

I am sure that you have noticed that I usually use the terms investing and trading together. I use the terms to mean two different things and I think that stock market participants do the same. By investor, I usually mean someone who buys stock with the intention of keeping them for a year or more with the anticipation of the stock price rising during that time of holding the stock. An investor would usually be considered to be more conservative. I use the term trader to mean someone who is not interested in keeping a stock for very long. A trader looks for short term opportunities (a few minutes to a few months) during which to make money as a stock price rises or falls according to the traders predictions. A trader would usually be considered to be aggressive or very aggressive (with aggressive in this case only meaning high tolerance for risk, willingness to watch the trade carefully, ability to make quick decisions, and ability to quickly process lots of information). I both invest and trade to meet my financial goals. There is no right or wrong to being a trader, an investor, or some blend of the two. The important thing to remember is to do that which you are most comfortable doing and that which you are the most financially successful at doing.



Table of Contents, Appendix, and Index

I encourage you to use the Table of Contents at the front of this book to guide your reading and study in a general way, to use the index located at the back of this book to find or re-locate some small bits of information you are interested in, and the appendix to discover some unusual or obscure, but useful to some, information which just didn't seem to fit anywhere else and which I just couldn't bear to leave out of this book.

Disclaimer

I strongly encourage you to take full responsibility for your investing or your trading. By doing so you will be well on the way to a great education from and financial success in the stock market.

This book is designed to provide accurate and authoritative information in regard to the subject matter covered. It is intended for purely educational use. It is provided with the understanding that the author is not engaged in rendering financial, legal, accounting, or other professional service. If financial advice or other expert assistance is required, the services of a competent professional person should be sought.

Brian L. Nowell and The Development Center Stock Disclaimer:

I am a psychologist and educator, not a stock broker. I do not have any investments for sale. I will not get anything out of the profits or losses you experience. You will invest in any stocks (or other investments) at your own risk; therefore you need to do your own research and rely on your own professionals to make your investing decisions. I do have the right to give out educational information about this topic and about what I am personally doing about the topic. I or The Development may and in some cases do invest in or trade in the company stocks mentioned in this book. And I or The Development Center may sell or buy them back at any time.

Brian L. Nowell and The Development Center Option Disclaimer:

Because Options Expire, they are very risky. They are called "fixed time investments". This is one reason why you definitely should read the booklet put out by the Chicago Board of Options Exchange (CBOE) entitled Characteristics and Risks of Standardized Options. You can get this booklet for free from your/a stockbroker. It provides a lot of useful information ( some quite technical) including different option plays and the riskiness of each. I or The Development may and in some cases do invest in or trade in the company options mentioned in this book. And I or The Development Center may sell or buy them back at any time.

Importance of This Books Contents

I just want to let you know here that everything I put in this book, I put here for a very good reason. I have been teaching these things to beginning and experienced investors for the past 5 years. However, it is almost certain that some or much of what I have written will not appear understandable or helpful to you. Try to read everything in this book as carefully and as thoughtfully as you can. And I suggest that you keep a notebook of ideas and questions which occur to you as you read. You will find that practice to be very helpful to your investing or trading success. And, If you can stand it, after a break from reading this book read it again carefully before, during, or after you try the strategies I teach you.. Happy investing.

Brian L. Nowell, Ph.D.

Managing Director,


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