Tidal Swings of the Stock Market

To make great money in stock trading, you must not simply follow trends, but anticipate them.(NOTE: This work is a new edition of a classic investing book. It contains material that is all-new and all-original.)This is harder than it sounds. And for short-term traders, I believe, next to impossible.Therefore, the smart thing to do is to follow the long-term trends.That is how average people can build wealth as they work and save, then finally retire with financial freedom. If you have a fortune in stocks, you can read the news about Social Security with peace of mind. Let it go bankrupt!History teaches us that bull markets alternative with bear markets, just as high tides alternate with low tides.However, while we're living through those markets, we're caught up in the dominant emotion of the times.Greed during bull markets (remember thinking that Yahoo or DrKoop.Com just HAD to keep going higher?)Fear during bear markets (remember thinking in March 2009 that we were headed for a 4 or 5,000 Dow?)The markets do go to extremes -- and then they bounce back.And that's the key to making money with stocks.Not in minutes, days, weeks or months, but in years.Scribner Browne was an experienced stock trader, astute market observer and writer for The Magazine of Wall Street.Although his vocabulary is a little old-fashioned, most of his advice applies just as much today as it did in his time.He was quite well aware of the human weaknesses and vulnerabilities of people who sought to become wealthy through the stock market.He lived and wrote before computers, but he realized -- unlike many modern-day "quants" that for every transaction there is a real person buying and another real person selling -- and both of them believe they're the right thing.A lot of stock market commentators talk a lot about the "markets," but Browne didn't forget that's just jargon for referring to all the people who buy and sell stocks.And being people, they buy and sell for emotional reasons.He analyzed the effect of psychology on the markets long before most of us were born.Yet he also maintained that in the long run, the stock market needs good business conditions. He figured out many years ago that the stock market anticipates what is going to happen in the general economy.He discusses the fundamental factors affecting stock market prices, and mentions diversification and asset allocation decades before Harry Markowitz wrote his famous thesis.I can't guarantee you'll become rich just by reading this book. But it's a valuable addition to every investor's library.