The MarvinMatrix Survival Kit for Investors
Investing during tough economic times is scary and risky. Without a plan, an investor is tempted to sell out at the worst possible time. Discipline is critical.
One of the points stressed in the book is how to measure whether the investor has the the kind of discipline necessary to be in the stock market.
The macro economic picture can impact the pricing of virtually all stocks. The need to closely evaluate a potential purchase is more important during tough economic times. The author helps to guide the reader through an Algorithm that helps to measure the practicality of a particular stock purchase or sale.
The author, Stanley Marvin Burnstein has the necessary background to discuss ways to make money in the stock market during good times and bad. He has seen tough times before. As a CPA and Attorney, he has been advising clients about financial matters for over 30 years. He has lectured to hundreds of professional groups and organizations, including the Univ of Mo at Kansas City School of Law, CLE Division, and the American Institute of Certified Public Accountants. He is known for his plain english style of presentation.
The book has been recently updated to reflect the current nature of the economy and the need to be more selective than ever before.
Some of the theories explored in the book include:
The need to be a contrarian, and be able to buy when others are selling (at the bottom), and being able to sell when others are buying (probably at or near the peak).
The need to be out of the bond market when rates are low. When rates go back up, the value of the bonds automatically go down, on a highly leveraged basis.
The main theme of the book is to teach investors at all levels of skill a strategy that makes sense and has worked well for the author the last 30 years.
The book explains the MarvinMatrix Algorithm which is presently available for free on another website, described in the book.
The Algorithm helps the investor measure the upside potential of a given stock selected by the investor.
Next, the algorithm helps to measure the downside risk. A score is given for each category being measured.
Next, the investor is scored on his ability to maintain a disciplined approach and not be frightened to the point of selling at the bottom of the market. If the investor is not able to maintain this discipline, he should not be in the market.
The above 3 steps are the primary themes expressed in the book. However, it is not merely expressed as a theory. It is explained in a practical conversational manner that is easily understood. The book provides the necessary background to run the calculations at the calculations website, described in the book.
In measuring the upside potential, the author explains to the reader/investor how to calculate the ratio of the stock price to next year’s estimated earnings. This is expressed as a Price to Earnings (P/E) ratio.
Stanley Marvin then explains where to find the guidance for next year’s estimated earnings, and factors to consider in determining its reliability.
If the P/E ratio is not reasonable, do not buy the stock. There is discussion in plain English of how to determine if the P/E ratio is reasonable.
The reader is asked to look at the estimated annual growth rate in the earnings per share. The reader is coached on how to read the financial statements and to sit in on the company’s quarterly conference calls to help determine if the estimates are reasonable.
One of the goals of the book is to explain how to determine if the stock is a bargain. If it’s not a bargain, don’t buy it.
The book explains how the Algorithm will help the investor determine what to buy, when to buy, what to sell, when to sell, and when to be out of the market. And, it is all in a style that everyone can understand.
Then, the author compares the P/E Ratio to the estimated Percentage increase in earnings per share to help to determine if the P/E Ratio is reasonable. This is part of the MarvinMatrix Formula explained in the book.
The book will focus on small cap stocks, which have fewer shares traded each day when compared with larger companies. These smaller companies are not normally traded in significant volume. There are times when these stocks are “out of sync.” When an investor dumps a large number shares and there are few buyers, it is like going to an auction and finding that there are no other bidders. The author explains how to find and take advantage of this kind of opportunity.
The ideal stock is one selling for a low PE ratio that has a high growth rate in earnings per share. With the internet, the opportunity for finding such stocks is now available for the small investor.
The author is not a believer in the “charts” that focus on volume and price action. The more reasonable approach is that eventually good earnings growth will result in increases in the price of the stock. So, the focus is on earnings and earnings growth.
The book explains how to invest during uncertain economic times. Investing today requires a new and different strategy. This book suggests that the investor use the MarvinMatrix Strategy and then go to the calculations website to use the MarvinMatrix Algorithm.