11710) and Richard Russell (Dow
Theory Letters,
Dow Theory Letters Inc., P.O. Box 1759, LaJolla, CA 92038).
Of the traders I have interviewed, Zweig is probably the one most mentioned.
You always get something of value out of Marty Zweig. He is very solid.
Judging by the letters you have mentioned, I take it that you trade stocks as well. How long have
you been trading stocks?
For about the last two years.
Do you trade stocks differently than you trade futures?
I'm more patient.
Is the selection process different?
No, I look for confirmation from the chart, the fundamentals, and the market action. I think you can trade
anything in the world that way.
Do you focus on any particular types of stock?
I don't trade the Dow stocks. I prefer the little ones, because they are not dominated by the big professional
traders who are like sharks eating each other. The basic principle is that it is better to trade the Australian dollar than
the Deutsche mark, and the small OTC stock than the big Dow stock.
What are the fundamentals you look for in a stock?
I like to use something I found in
Investor's Daily:
the
earnings per share
(EPS). [The EPS ranking is based
on comparing the earnings per share growth of a stock relative to all other stocks. For more details on the EPS, see
the William O'Neil and David Ryan interviews.] I combine the EPS with my own sense of market share potential. If a
company has already saturated their little niche in the world, a high EPS is not that important. But, in those issues
where the EPS is growing, and there is still plenty of pie out there, the situation is much more attractive.
I also like to look at the price/earnings (P/E) ratio in conjunction with the EPS. hi other words, while I like to
see a company with a strong earnings growth pattern, I also want to know how much the market is paying for that
earnings growth pattern.
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