Joe Terranova turns the investing world on its head by revamping the old “buy low, sell high” adage in Buy High Sell Higher: Why Buy-And-Hold is Dead and Other Surprising Lessons from CNBC’s “The Liquidator” (Business Plus, 2012.) The author is known as The Liquidator for his ability to coolly close positions when others cannot or will not. He offers great advice for those willing to break out of typical retail investor mindset and trade like a professional.
Terranova spends the early parts of the book establishing his credentials as a trader by his own experience in the energy pits and alongside other professional investors. Well-known for his regular gig on the CNBC show Fast Money, in this book he has the time and opportunity to explain some of the terminology he uses on the show that may be unfamiliar to even seasoned investors.
Why Buy High, Sell Higher?
The crux of Terranova’s thesis is that investors should buy stocks and commodities that have had a recent demonstration of strength, rather than weakness. Why should an investor spend time and money on a stock that has been weak, hoping for a recovery? Stocks that have gone up can continue to go higher, provided the impetus for the increase is still present.
The author provides detail on how investors can use technical analysis to find entry and exit points (“frames of reference” in Joe’s lingo) as well as an understanding of how macro events impact individual stock decisions.
More Interesting Investing Advice from the Liquidator
Terranova offers other advice that separates the casual trader from the professional:
- Every investor should have a team of like-minded friends or colleagues to bounce ideas off and to make sure the investor is accountable to staying within a written plan.
- Each investor should keep an investing calendar, with major macro events, like Federal Reserve meetings, as well as key dates that impact individual stocks like earnings releases. The book details other events which are sure to impact your investments.
- Terranova limits his trading to certain times of the year, days of the week and times during the day, in order to make sure he has an accurate read of where the market is going.
- Investors should focus on companies that they are familiar with, or are willing to research. The time to understand a company’s business is before you invest, not after.
- Investors need to be flexible and have dry powder ready to invest when opportunities present themselves.
Buying Stocks into Strength
Whether you agree with Terranova’s theme of buying stocks when they are showing strength, or you prefer to get your stocks on sale as if they were pants at Macy’s, there is a lot of useful information in this book. Investors are always better off with more information, and if nothing else, this look into the mind of a professional trader will help you understand how markets move.
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