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Our Methodology |
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| The Break Out Report is an investment
newsletter drawing on methodologies developed by a number of
brilliant stock market geniuses. We make no claim to
originality here, except perhaps in how we synthesize various ideas
into an integrated method.
The grand-daddy of these super investors is Jesse Livermore. He achieved some fame for shorting the market and making $100 million during the great stock market crash of 1929. In today's dollars, that would be well over a billion dollars. His life story is brilliantly told in Richard Smitten's Jesse Livermore: World's Greatest Stock Trader. His methodology is revealed in Livermore's own book, How to Trade in Stocks. Livermore's methodology was independently discovered and applied with brilliant success by a professional dancer named Nicolas Darvas. He explained his method in his book, How I Made $2,000,000 in the Stock Market. Darvas achieved his stupendous success in the 1950s, so in today's dollars, that two million would be a lot more. The third investment genius I draw on is William O'Neil. O'Neil developed a system called CANSLIM. That's an acronym for his seven step method. There are some striking similarities to both Livermore's and Darvas's methods. O'Neil went on to found the renowned newspaper, Investor's Business Daily. And the final genius I draw on is Peter Lynch. Lynch became the head of Fidelity's renowned Magellan Fund in 1977, and when he retired from the position in 1990, the fund had achieved a stunning average annual return of 29.2%. Lynch went on to write two investment classics, One Up on Wall Street and Beating the Street. In them he explains his method in easy to understand terms. Lynch's method isn't the same as the Livermore/Darvas/O'Neil method but he offers some valuable insights into stock market success, some of which we use in our stock picking. Below is an organized approach to understanding the methodologies of our market gurus. Read through each of the articles for a good introduction to their thought. Our own integrated method will be developed as a monograph for new readers. The Market Genius of Jesse Livermore
The Dancer Who Dazzled the Stock Market
The Empiricism of William O'Neil
Peter Lynch: Money Manager ExtraordinaireI hope you enjoy reading these books as much as I have. They will give you a good insight into how I approach stock investing.
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