By Katie McCaskey, Geezeo.com
Anyone familiar with the pop-culture/financial news mash-up WallStrip is disappointed that it’s gone.
Luckily, the book version lives on. WallStrip’s founder, Howard
Lindzon, just released a book titled
“The WallStrip Edge: Using Trends to Make Money — Find Them, Ride
Them, and Get Off”. Even novice investors can learn a thing a
two from it.
Lindzon’s premise is simple. The conventional wisdom is to buy inexpensive stock and wait for it to rise (based on your research or dumb luck). Instead, Lindzon advocates buying trendy stocks that are already trading at their all-time highs and which, as he explains, look to be climbing higher.
The idea is to “buy high” and then “sell high” while the stock keeps moving upward thanks to popularity and demand. Some of the recent trends he discusses include Apple, Chipotle, and Crocs.
Sounds simple. But is it? Lindzon does a good job of describing how you should evaluate a company’s growth potential using your own experience interacting with a particular brand. He explains that you must establish your individual buy/sell guidelines. And lastly, you must be willing to sell even if, and particularly if, the stock seems to be climbing to even greater heights.
Here Lindzon makes an excellent point about discipline. In a segment titled “Bear Markets, Like Sh*t, Happens”, he writes,
“Unloading your best stocks after they have dropped 25 to 30 percent from all-time highs is an awful feeling. It feels wrong, but in the business of trend following it is inevitable. You must have discipline.”
Lindzon also points out the flaws associated with taking or giving “hot stock tips”, and, the seductive danger of holding a bad-performing stock because you never knew why you bought it in the first place. These points may sound simplistic until you consider how many people invest based on the opinions of others and/or wind up with a portfolio whose origin they really cannot explain. Both are bad habits that can easily trip up a trend investor.
This book is a great read for a new investor and even someone with some experience. The material is humorously presented but don’t let that fool you: there are some rock-solid ideas inside.
