Fundamental Analysis and Position Trading	3
	Contents	7
	Preface	13
	Acknowledgments	19
	1 Introduction to Buy-and-Hold	21
	What Is Buy?and?Hold?	22
	Who Should Buy and Hold?	22
	My Numbers: Background and Terms	23
	Now What?	23
	2 Stock Selection	25
	What Comes After Large Price Moves?	26
	Myth: Stocks That Drop Least in A Bear Market Then Soar	27
	Stock Selection the Easy Way	28
	Two Tips for Stock Selection	29
	Buy Fallen Angels	30
	What Chart Patterns Apear Before Mergers and Buyouts?	30
	Overpaying?	32
	What Are Insiders Doing?	33
	Chapter Checklist	35
	3 Book Value	37
	Book Value Defined	38
	Value Assets Properly	38
	Investing Using Book Value	39
	When Is Book Value Important?	39
	The Value of Hidden Assets	40
	Limits of Book Value	41
	Buybacks Lower Book Value	42
	Historical Research	42
	Price to Book Value: A Good Measure	44
	Small Caps: Best Choice	45
	Low Stock Price Rules!	47
	Book Value and Return on Equity	48
	What Is the Best Price to Book Value?	49
	Combinations and Performance	50
	Trading Strategy: Beating the Dow	51
	The Eight?Stock Setup	52
	Hold Time for Best Results	54
	Chapter Checklist	55
	4 Capital Spending	57
	Is Decreasing Capital Spending the Holy Grail?	57
	Capital Spending Trends versus Performance	58
	Frequency Distribution	59
	Performance by Market Cap	60
	Chapter Checklist	61
	5 Cash Flow	63
	Historical Research Review	64
	Cooking the Books	65
	The Numbers	66
	Is Increasing Cash Flow Good?	66
	Median Performance	67
	Performance by Market Cap	68
	What Is the Best Cash Flow Value?	69
	Chapter Checklist	69
	6 Dividends	71
	Stock Dividends: An Explanation	72
	Historical Research Review	72
	High Yield, High Performance?	73
	Testing: Yield and Pay out Ratio	74
	Which Is Best: Dividends or No Dividends?	75
	Surprise: Dividend Cuts Work!	75
	When Disaster Strikes	77
	Performance by Market Cap	78
	Chapter Checklist	79
	7 Long?Term Debt	81
	The Numbers	81
	Is Debt Good?	82
	Sinking Ship: Taking on Debt	82
	Debt by Market Capitalization	83
	Debt-Free Market Caps	84
	Chapter Checklist	85
	8 Price?to?Earnings Ratio	87
	History Lesson	87
	Do Low P/E Stocks Outperform?	88
	P/E Trends Down: Good or Bad?	89
	Price and Earnings Combinations: Yawn	89
	Buy Small Caps with Low P/E	90
	High P/E: Time to Sel?	91
	Three P/E Tips	91
	Chapter Checklist	92
	9 Price?to?Sales Ratio	93
	Good Benchmark: PSRs Below 1.0	94
	PSR Trend: Down is Best	95
	Small Caps, Small PSRs Rule!	95
	Market Cap versus Sales	96
	Checklist: PSRs by Industry	97
	Chapter Checklist	98
	10 Return on Shareholders’ Equity	101
	Low ROE Stocks Outperform: Why?	102
	ROE Trend Over Time: Yawn	103
	ROE Performance by Market Capitalization	103
	Chapter Checklist	104
	11 Shares Outstanding	105
	Performance versus Shares Outstanding	105
	Event Pattern: Dutch Auction Tender Offers	107
	Should You Sell?	107
	Sell at What Price?	110
	Event Pattern: Common Stock Offerings	111
	Performance and Market Capitalization	113
	Chapter Checklist	114
	12 Fundamental Analysis Summary	115
	Performance Rank: One-Year Hold	115
	Performance Rank: Three?Year Hold	117
	Performance Rank: Five?Year Hold	119
	13 How to Double Your Money	121
	How Long to Double?	121
	What Is the Best Buy Price?	122
	Which Market Caps Do Best?	123
	Focus on Fundamentals: Which Are Best?	124
	Price to Book Value	124
	Capital Spending	124
	Price to Cash Flow	125
	Dividends	126
	Long?Term Debt	126
	Price?to?Earnings Ratio	127
	Price?to?Sales Ratio	128
	Return on Equity	129
	Shares Outstanding	130
	Warning: Losses Ahead. What You Need to Know	130
	Testing the Setup	132
	Chapter Checklist	133
	14 Finding10?Baggers	135
	How Long to 10x?	136
	What Is Highest Starting Price?	136
	What Happens the First Year?	137
	Rising Over Time: How Fast?	138
	10?Baggers by Market Cap	139
	Fundamental Ratios Common to 10?Baggers	139
	Price to Book Value	139
	Capital Spending	140
	Price to Cash Flow	141
	Dividends	142
	Long?Term Debt	142
	Net Profit	143
	Price to Earnings	143
	Sales	144
	Price?to?Sales Ratio	145
	Return on Equity	145
	Shares Outstanding	146
	Industries Most Likely to Make 10?Baggers	147
	The Most Popular Years for 10?Baggers	148
	Surprising Finding about 10?Bagger Losses	149
	Backward Testing	149
	Chapter Checklist	150
	15 Trading 10?Baggers	153
	10?Bagger Birth	153
	10?Baggers Start from a Flat Base	155
	Some 10?Baggers Prefer a V?Shaped Start	156
	Moving Up: A Higher Valley Turn	158
	Life of a 10?Bagger	159
	Weekly Measured Move Up	159
	MMU Measure Rule	162
	Two?Hump Shape	163
	Trading Humps	165
	Line Shape	166
	Rounded?Turn Shape	167
	Stair?Step Shape	169
	10?Bagger Death	170
	The Numbers	172
	Chart Patterns in 10?Baggers	172
	Head?and?Shoulders Top	172
	Double Top and the 2B Rule	173
	Triple Top	174
	Inverted V	175
	Rounded Turn	176
	Ugly Double Top	176
	Chapter Checklist	176
	16 Selling Buy and Hold	181
	The Weinstein Setup	181
	Stage 2	182
	Stage 3	183
	Stage 4	183
	Testing	184
	Example: The Southwest Airlines Trade	185
	Indicators	186
	Example: Savient Pharmaceuticals	187
	1?2?3 Trend Change for Downtrends	188
	1?2?3 Trend Change for Uptrends	190
	1?2?3 Testing	190
	The Cloudbank Setup	192
	Identification	192
	The Shape of Bottoms	193
	Investing in Cloudbanks	194
	The Numbers	196
	Buying Cloudbanks	197
	Selling Cloudbanks	198
	Using Trailing Stops to Sell	198
	Timely Trend?Line Exits	200
	Can Moving Averages Help?	201
	Follow Insider Transactions	203
	Selling: Two Ratio Tips	204
	Selling Down from a High	205
	Selling Methodology	205
	Selling Results	206
	Chapter Checklist	207
	17 Fundamentals: What I Use	209
	Two Book Value Tips	210
	Do Not Get Singed by Burn Rate	210
	Drop Capital Spending!	211
	Current Ratio 2.0	211
	Prospecting for Growth Using Dividends	211
	Rising Earnings, Net Profit	212
	P/E Ratio versus Industry	212
	Litigation: Stop Pissing People Off!	213
	Avoid Too Much Long?Term Debt	213
	Market Capitalization: Big Returns by Going Small	214
	Research Spending	214
	Sales? Think Money	215
	Price?to?Sales Ratio: What About Debt?	215
	Stock Price: 5 to 20	215
	Volume: Thin Ice Ahead!	216
	Chapter Checklist	216
	18 Introduction to Position Trading	219
	What Is Position Trading?	219
	Who Should Position Trade and Why?	220
	What Position Trading Will Not Do	222
	Example Position Trade	222
	Chapter Checklist	225
	19 Getting Started in Position Trading	227
	Check the News or Lose!	228
	Trend? What Trend?	229
	Ripples	229
	Waves	230
	Tides	231
	Trade with the Primary Trend	231
	Take Your Pick: Bottom Fishing or Momentum?	232
	What Is Market Influence on Stocks?	233
	What Chart Patterns Are Best for Position Trades?	234
	Busted Chart Patterns Revisited	236
	Trading Example: Finding Value in Disaster	238
	Financials	239
	The Buy	240
	The Sale	240
	Chapter Checklist	241
	20 Ten Factors Make Chart Patterns Work	243
	What Is a Double Bottom?	244
	Double Bottom Reversals	245
	Ten Factors Revealed	246
	Trend Start	246
	Flat Base	248
	Horizontal Consolidation Regions	248
	Position in Yearly Range	249
	Height	249
	Volume Trend	250
	Breakout Day Volume	250
	Throwbacks	250
	Breakout?Day Gaps	251
	Market Cap	251
	Scoring System Checklist	252
	Scoring Performance	252
	Higher Scores Work Best	254
	Case Study: Stillwater Mining	255
	Case Study: LSB Industries	257
	Case Study: Lumber Liquidators	258
	Chapter Checklist	260
	21 Three Winning Trades and a Funeral	263
	The Intel Fiasco	264
	Hudson Highland Hiccup	265
	Buy More	267
	CNO Financial Group	268
	That’s a Wrap	270
	Complete Production Services	270
	The Exit	272
	Chapter Checklist	274
	22 What Not to Do: Three Botched Trades	275
	Medivation: Selling Too Late	275
	Emergency Room	277
	Coldwater Creek: Selling Too Soon	278
	Psst. Time to Exit	279
	Hovnanian: Selling at the Bottom	280
	Checkout Time	282
	Chapter Checklist	284
	23 What We Learned	285
	Visual Appendix of Chart Patterns	303
	Bibliography	309
	About the Author	313
	Index	315