I recently began rereading one of my all time favorite investment books – Full of Bull by Stephen T. McClellan. McClellan’s a national best-selling author, writer and former Wall Street investment analyst with over 32 years of experience covering high-tech stocks. Full of Bull was his most recent book, where he outlines the ins and outs of Wall Street and provides strategies and tactics for investors. The main premise of the book, as stipulated by the subtitle, is “Do what Wall Street does, not what it says, to make money in the market.” And he certainly shows you how.
In Chapter 3, “Strategies in Quest of the Ideal Investment,” he offers several investment axioms adapted from his 1984 best seller Shakeout that protects investors from the snares and pitfalls lurking behind every corner. As far as I’m concerned, they are time-tested and true and definitely worth reviewing…
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It never rains bad news, it pours
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The first drop in profits is never the last
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When insiders sell, you should too
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Beware of stock price fixation
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The bigger their egos, the harder they fall
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Turnarounds are usually too little, too late
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If you read it in the morning paper, it’s too late
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When management says things are bad, assume they are terrible
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If you don’t understand a company’s business, management may not either, and the more likely a screw up will happen down the road
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New digs are a bad sign
