Forecasting Stock Market Trends is entirely devoted to the problem of forecasting the trend of the stock market. This book presents evidence that almost every stock will synchronize with the general trend of stock prices. A reliable forecast of a change in trend would therefore provide a source of information profitable to those able to appreciate its significance.
THE problem of how best to profit by the major swings of security prices is usually approached in two very distinct ways. One method of trading concerns itself only with the study of individual stocks. Traders who follow this system pay little attention to the broad swings of security prices, but govern their dealings by conclusions reached through analyses of conditions affecting individual companies’ stocks.
Another method of trading consists of following the indications provided by a study of the commercial, industrial, and :financial conditions in their relation to the trend of general stock prices. The difficulties involved in a comprehensive analysis of general conditions have led many investors to choose the simpler method; that is, to follow the condition of a few stocks, ignoring the general trend of stock prices, and hoping that those stocks selected for investment will appreciate in value more than the average stock.
The writing of this book was undertaken with the belief that such a method, although essentially sound and undoubtedly profitable from the long range viewpoint, did not take full advantage of the facilities now at everyone’s disposal with which it is possible to profit :financially by the ebb and flow of the entire stock market. To be sure, the selection of any stock must be preceded by a careful analysis of balance sheets and general conditions within the particular industry. But it must be realized that there are situations and conditions affecting the entire business world which are advantageous to the buying of almost all securities, while at other times the conditions are decidedly unfavorable. At such times it is hazardous to invest in any stock unless one is prepared to disregard a 50% drop in values to await blithefully a possible prosperous turn of affairs in the distant future.
- MOST STOCKS FOLLOW GENERAL TREND
- BUSINESS FAILURES
- EARNINGS AND DIVIDENDS
- PRICES OF INDIVIDUAL COMMODITIES
- GENERAL PRICE LEVELS
- SPECIAL PRICE INDEXES
- CROP PRODUCTION
- MINERAL PRODUCTION
- IRON AND STEEL PRODUCTION
- INDEXES OF BUSINESS ACTIVITY
- RATE OF CONSUMPTION
- VOLUME OF TRADE
- NATIONAL BANKS
- NEW YORK BANKS-FEDERAL RESERVE BANKS
- MONEY RATES
- BOND YIELDS
- STOCK AVERAGES AND INDEXES
- THE DOW THEORY
- THE IMPORTANCE OF STUDYING BASIC CONDITIONS