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situation.Throughout the book, he stresses the importance of active, informed, self-directed investing instead of the out-of-date and risky buy and hold approach which "may or may not service investors purposes in the future."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 asETFs.
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.
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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 (Hardcover)
For novices interested in technical analysis, there is so much material here it might seem overwhelming.But believe me, the effort at exploration is worth it.I've been successfully applying Appel's work since 1984, and this all-encompassing treatise was like looking over his shoulder, soaking in his 30 years of wisdom on the markets.
