By Donald Cassidy
Global Professional Publishing
294 pages, $29.95
There are only a handful of books published on when to sell a stock. Pinpointing the time to sell turns out to be very critical to an investor’s or trader’s ability to make money. It is a hard skill to learn and most investors and traders have failed to achieve mastery.
This 30-chapter book focuses on providing the reader with keen insights from a long-time market veteran. Divided into four main sections – understanding the selling problem, developing the proper mindset, mastering the contrarian approach and using smart selling tactics—the author describes how the investor can overcome emotional challenges, become a contrarian and market observer, use a personal diffusion index to assess the market’s turning point and become an intelligent stock seller.
The author provides multiple checklists to enhance the reader decision-making capability including 20 questions to determine a hold vs. sell decision, and a worksheet consisting of typical investor mistakes to avoid, stock reassessment checklist and sale checklist.
In a separate five-page chapter, the author recommends using four technical indicators, out of a possible universe of about 125, to assist in determining short-term tops. He focuses on a combination of the daily performance of the Dow Jones Industrial Average and the Dow Jones Transports, without explaining why he chose them over other market benchmarks. He suggests tallying up the number of up and down days for each index for rolling 10 consecutive days that would result in a total score for the period ranging between 0 to 20, since each up day would have a count of one for each average. Down days are not scored. Additionally, he suggests getting ready to sell when the 20 level, as this is an extreme condition, is reached and the future readings turn down over the next 10 days. No historical chart is shown of this indicator to gauge its accuracy.
Second, Bollinger Bands are discussed in general. The third indicator mentioned is the moving average convergence divergence (MACD), but there is no mention of price vs. indicator divergence that is very useful at critical turning points. And fourth, Equivolume charts are explained. None of these indicators were illustrated with charts to show the sell points. In summary, this chapter is very weak when it should have been much more robust in details and charting examples. Basically, he treats technical analysis rather casually, although most market experts would argue for that technical analysis is superior to fundamental analysis in determining when to buy and sell a stock.
Included is a reading list of the author’s favorite books on related aspects of the stock market. This list is short and most books are 15 years old or older, not at all current. For example, there have been a number of excellent books on the psychology of investing that are completely missing, including those written by Dr. Brett Steenbarger, Dr. Ari Kiev and Dr.Alexander Elder.
Since the first edition was published in 1991 under the title “It’s Not What Stocks You Buy, It’s When You Sell That Counts,” not much new material is included and the chart data and other exhibits hail from the late 1990s or earlier. In summary, although this book provides a detailed look at critical subjects that can assist traders and investors in their selling decisions, the lack of current examples and charts and minimal focus on technical indicators are key missing elements. Inclusion of Internet resources and additional charting and technical sites would have made this edition more relevant.
Leslie N. Masonson is president of Cash Management Resources, a financial consulting firm, and author of “All About Market Timing” and “Day Trading on the Edge.” Reach him at lesmasonson@yahoo.com.
