West Virginia native authors book on stocks
CHARLESTON, W.Va. -- Barbara James has a daily morning routine that includes checking a few stock market lists, investors' websites and talking with a trading buddy over the phone, according to a new book written by West Virginia native Amy Smith.
Surveying stocks regularly hasn't always been a hobby for the former executive secretary, though.
After losing her husband of 30 years to a heart attack and getting laid off from her job in 2004, James started studying the market, charts and more.
"The key is creating a routine that works for you, something you will continue to do on a consistent basis, every day," James told Smith for "How to Make Money in Stocks Success Stories." "I sold real estate and was a secretary, so if I can become a successful investor, anyone can."
Smith, a West Virginia native and 1978 Elkins High School graduate, is a market commentator for Investor's Business Daily. But she said she didn't know anything about the stock market before she attended a free seminar where William O'Neil, chairman and founder of Investor's Business Daily, spoke.
"I'm the proof that anybody can be a successful investor," said Smith, a University of Southern California theater major who worked in fitness training for nearly 20 years before she discovered her passion for investing.
"I won't say the stock market isn't complicated, but when you boil it down, what makes a stock go up? It's always earnings and it's because a company is doing something right."
Stocks in the United States have trended up since November, Smith said.
Starting last week, the Standard & Poor's 500 Index climbed for four straight days. The S&P and the Dow Jones Industrial Average closed at new record highs throughout the week.
The Dow average on Friday had dropped 0.08 point, to 14865.06, snapping a three-day streak of all-time closing highs, according to MarketWatch. The S&P lost 4.52 points, or 0.3 percent, to 1588.85, ending a two-day streak of record closing highs.
"The S&P went to new high grounds this week ... and it has everybody excited," Smith said Thursday. "We are just above where we were in 2000 and that is positive. When we hit this before in October 2007, we backed way off of it so we're watching to see if the indexes continue higher."
Casual restaurant chains and fast food restaurants, such as Papa John's, Panera, and Krispy Kreme Doughnuts, have been doing well in the market recently, she said.
Travel and leisure markets, like car rental companies Hertz and Avis, have been on the uptrend, too.
Homeaway, an online vacation rental marketplace, saw its earnings increase 100 percent in the most recent quarter.
US Airways' earnings were up 100 percent, too, in the same period, Smith said.
"When is the last time we thought about investing in airline stocks?" she said.
"If we get good earnings numbers and these companies are doing well, then that bodes well for the economy," Smith said. "If we did get some sort of pullback, it doesn't mean that the market is finished, the market just ebbs and flows and some sort of a pullback would not be a horrible thing, it would be a very normal thing for the market to correct a little bit."
Smith said investors thought the market was going to correct two weeks ago, but it "turned right around and took off again."
When the market does retract, that's time for individual investors to step to the sidelines, she said.
"You also have to let the overall market trend be your guide as to whether it is a good time to be in stocks or not," James said in "Success Stories."
Smith said investors look for companies selling products with a high demand.
When Apple introduced the iPod, Smith said everyone from children to grandparents wanted the portable music player.
"That's what will cause the investor to go in," Smith said. "When you have a mass market for a product or service, that will really drive the earnings and that's where the professional money put their money."
But Smith warns in her book, "Never buy stocks right before earnings because anything can happen."
If the company continues to report high earnings, then buy their stocks, she said.
In "How to Make Money in Stocks Success Stories," Smith talks about how Barbara James admits to having a "favorite pet stock" with F5 Networks. In April she had sold for a profit of 12 percent and in November for a profit of 22 percent.
But the third time for F5 Networks was not the charm, Smith wrote.
"Barbara broke one of her rules and bought the stock right before earnings," Smith wrote.
F5's earnings disappointed expectations and the stock dropped 26 percent, she wrote.
"A stock can sour on good earnings or dive precipitously on disappointments," Smith said in her book.
There are times within the market when investors should protect their money, go to cash and wait for the market to get healthy again.
Having a few successful stocks in a year will still bring individuals out on top, she said.
"The idea is to keep your losses small and let your winners run and that's how you make money in the big market," Smith said. "With the stock market, you can achieve some outstanding results."
Smith said she wrote the book to share success stories of everyday investors with the public. She outlines the mistakes each person made while explaining -- using charts as tools -- how they ended up on top.
The market expert said she has plans to write a second book after the positive reaction to "How to Make Money in Stocks Success Stories."
Reach Megan Workman at email@example.com or 304-348-5113.