From Publishers Weekly
While Appel’s previous books offered advice on technical analysis of stocks and price movement charts aimed at aggressive day traders, this one covers tamer versions of those strategies for conservative retail investors. Despite the sensational subtitle, the advice is generally solid, calling for broad diversification with a little excitement from a moderate level of turnover. However, unlike conventional wisdom, which advises buy-and-hold diversification, the…
Buy Opportunity Investing: How To Profit When Stocks Advance, Stocks Decline, Inflation Runs Rampant, Prices Fall, Oil Prices Hit the Roof, … and Every Time in Between at Amazon
Gerald Appel is a well-known author, technical analyst (and developer of the Moving Average Convergence Divergence (MACD) indicator) who has written a practical guide to investing while dispelling a number of Wall Street myths on along the way. His book’s purpose is to help readers who have limited time on their hands become active intelligent investors, as well as to help those individuals who are willing to put in more time and effort.
In the book, Appel covers specifically which vehicles to invest in, the timing of the buys and sells, and how to construct a portfolio that is diversified and balanced based on the individual’s age and financial situation. Throughout the book, he stresses the importance of active, informed, self-directed investing instead of the out-of-date and risky buy and hold approach which “may or may not service investors purposes in the future.”
The author suggests that investors focus not only on the U.S. stock market, but also on the overseas markets. He recommends investing in U.S. stocks, bonds, and money market instruments, as well as the more unfamiliar foreign bonds and stocks, real estate, and investments in foreign countries.
Appel kicks off the book covering the myth of why buy and hold is not a risk-free investment strategy compared to active management. He shows that by using a few indicators such as the NASDAQ/NYSE ratio, direction of interest rates, public sentiment, and the Best Six Months Strategy (buy at end of October and sell in May and go into cash until next October) that investors can reduce their risk and obtain decent investment performance. For example, by using the NASDAQ/NYSE relative strength ratio with a 10 dma crossover signal, according to Appel it is possible to beat the market’s performance with about half the risk.
In another chapter, the author compares three diversified mutual fund portfolios showing how different market segments work well together to reduce risk and improve returns. He covers the basics of how to select the best mutual funds by providing the most important characteristics to consider for the long run. Furthermore, he illustrates how to pick funds that are in the top decile of performance.
Appel devotes a separate chapter to income investing suggesting short-term bonds with high credit ratings, and current interest flow. In a section on maximizing safety he mentions T-bills, money market accounts, and setting up a bond ladder with wide diversification. He also reviews what to focus on for maximum potential returns, as well as balancing risk and return. A follow-on chapter reviews the keys to securing junk bond yields at Treasury bond risk levels. Another chapter reviews investing in REITs while another covers investing abroad using open-end and closed-end funds as well as ETFs.
Appel favors ETFs as a new way to invest replacing the typical mutual funds. He contrasts the pros and cons of ETFs, the different ETF categories, and how to create and maintain a diversified portfolio. He provides three specific sample portfolios for different types of investors.
The author’s market timing approach encompasses both fundamental and technical analysis. On the fundamental side he reviews the P/E ratio, bond yields, earnings yields and provides guidance on how to interpret the readings. On the technical side, he discusses the four year and presidential election market cycles, advance decline line, and new high new low breadth indicator.
Overall, Appel provides readers with a time-tested practical approach to take control of their investments. For those readers that prefer investing using their own skills this book will provide and excellent plan for moving ahead and succeeding.
4.0 out of 5 stars
Shows there is always a bull market somewhere
This book does an outstanding job explaining how to use different investment vehicles at the right time to find opportunities and achieve results.
Being a financial advisor, I’ve come across books that range from the very basic to the ridiculous.
Appel’s book, although more conventional then his previous titles, lays out a comprehensive, although extremely practical and relevant strategy for 1) understanding how the markets both stocks and bonds work and 2) giving the investor various options to use that although do involve time and some monitoring, provide a solid blue-print step by step guide that will allow them to more intelligently invest with their hard-earned assets while reducing risk where possible.
Moreover, the combination of fundamental and technical analysis in security selection allows the investor to capitalize on both areas of the market that are affected by emotional factors (external events) but also takes advantage of proven technical and analytical strategies that in the long-haul will give the investor above market gains.
Highly recommended.
5.0 out of 5 stars
Good book
Really like this book. Covers sector rotation, etf’s, how to position yourself to profit regardless of the market. Good, usable information. Yes it is backtested info.
For all of us that are interested in taking a more active role in our investments, the processes in this book are a good next step. There is a rare balance of acceptance of risk and potential gain in the author’s suggested quarterly re-allocation method. The method is not a “read the market” approach, which virtually no one can do consistently, if at all. It is rather a method to use recent fund performance as a purchase / reallocation guideline for short periods of time (as in quarterly). It is definitely not for everyone, because of the quarterly attention required. A very good incremental step in a maturing investor’s education.