Fire Your Analyst

Fire Your Stock Analyst is the book I wish I'd been able to read when I was starting out.

Sure, I found plenty of stock market books, and I read dozens of them. Many described great strategies for beating the market. Most brimmed with anecdotes describing the successes that the authors enjoyed by implementing their ideas. But they were like movies with no endings. None told me how to put all those great ideas into practice.

I wrote Fire Your Stock Analyst to fill that void. It's like a recipe book, except it's about stocks instead of cooking. It describes practical step-by-step procedures for finding, researching and evaluating worthwhile investment candidates. All the procedures use free resources that are readily available on the Web.

This is not a get-rich-easy kind of book. It reveals no magic formulas. This book is for people who know that making money in the stock market isn't about collecting tips from gurus on TV. It's a nuts and bolts resource for investors who are willing to put in the time and effort required to fund and research profitable stock investments.

I didn't come up with all of this stuff on my own.

Sure, I thought I knew about analyzing stocks when I started. I'd been teaching it, writing about it, and doing it for years. I had pored over scores of investing how-to books by famous and not-so-famous gurus and studied their teachings. I meticulously researched how I would have fared if I had followed their strategies in the past. Based on their work, I synthesized and tested my own strategies.

But writing this book turned out to be a huge educational experience for me.

Before I started writing, I interviewed 15 professional money managers and market analysts. I had never met any of them when I started. I found some because they managed best-in-class mutual funds. Others were market analysts or private money managers practicing innovative strategies that I'd heard about from other professionals or through their own writings.

Some interviews led me to academic research. I had always assumed academic research was just too, well, academic to be of interest. But I was wrong. I wound up interviewing a half-dozen college professors who had published groundbreaking and surprisingly practical research on topics ranging from picking the best value stocks to momentum strategies.

The wealth of information that these market professionals and academic researchers so kindly shared with me formed the basis for Fire Your Stock Analyst.

In a nutshell, this book shows you the use of free stock screeners to find worthwhile stock candidates, the process of quantifying overall market and stock-specific risk, and the two step-by-step stock selection strategies: one for growth stocks, and the other for value investors. Equally important, this book tells you when to sell.

Some market sages believe that value and growth investing are, in fact, similar strategies. But, in practice, they are not. The selection process for picking value stocks is almost the opposite from the strategies that growth investors follow.

That said, value and growth investors start with the same information, and this book describes 11 easy-to-use "analysis tools" common to both investing styles.