Insider Buy Superstocks

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By Emil

“Insider Buy Superstocks” by Jesse C. Stine is packed with thought-provoking, actionable information on how to make money in stocks. It is a book for both beginners and experienced investors who desire a framework for finding super stocks and analyzing them using both fundamental and technical analysis.

Author: Jesse C. Stine

Subjects: (1) Finance, (2) Trading, (3) Biography

Year: 2013

Number of pages: 250

Language: English

Publisher: The Superstock Letter


Summary

“Insider Buy Superstocks” is written by Jesse C. Stine, a name that many may not have heard of before, but who has managed to deliver a return that most dream of but few achieve. It is a book for both beginners and experienced investors who desire a framework for finding super stocks. Therefore, the book also covers significant areas such as technical and fundamental analysis, when to buy, and when to sell. Unlike most other investment books, it is highly practical and can easily serve as a complete investment framework or approach for brand new investors.

The book begins by describing the author’s background, why and how he became interested in the financial markets. It is worth mentioning that the author had no special prerequisites for succeeding in investing and only developed an interest while studying economics at university. He is also open about his mistakes and all the times he lost his own savings, starting from his first investment in a biotech company to buying stocks in the company he worked for during the dot-com bubble. He mentions that he only started experiencing consistent results when he began learning from his mistakes, which is a lesson many of us can take away.

Afterward, the book presents simple learning statements that are relevant for delivering better-than-mediocre performance. This includes taking calculated risks, where the minimum upside should be 10-to-1 relative to the downside, and being willing to learn (passion) and do things differently to execute on the few opportunities that arise. Additionally, he mentions classic things such as believing in oneself, being optimistic about one’s approach, and using losses as a learning process (Chapters 2 and 5). He also dedicates a couple of chapters to explaining the things one needs to distance oneself from. This includes avoiding watching the news and being aware that both the media and major market players consciously manipulate the markets, which opens up opportunities for the small investor. These chapters (3 and 4) are quite relevant for the new investor but can be skipped by the more experienced investor.

From Chapter 6 onwards, Jesse Stine delves into his investment approach, and for many, this is where it starts to get interesting. Before going into depth about his strategy, he mentions three things that I find valuable. Firstly, he emphasizes the importance of keeping it simple, as most successful investment strategies are usually very simple and easy to understand. Secondly, it is about charts, as they provide insight into market psychology, and one should always start with charts and technical analysis before moving on to fundamental analysis. The third and final point is to never buy into a company’s story but instead buy good patterns on a chart, as the story follows.

Chapters 7, 9, and 10 present the methodology, where the reader truly gets value for their money. Chapter 8 focuses more on the risk-return ratio and the investment process itself. The author starts by explaining the criteria for a super stock, based on eight criteria for technical analysis and 24 criteria for fundamental analysis. Technical criteria include breakout from a strong base and a stock price above the 30-week moving average. For fundamental analysis, the focus is on earnings growth and sustainable profitability. The book also covers rules for low-risk purchases, which are highly relevant for timing one’s positions. Generally, these criteria are easy to understand and can be easily implemented in one’s own analysis. What also makes the book highly practical is that in Chapter 13, the author provides a list of key resources where one can find the tools he himself uses to assess the aforementioned criteria. Another aspect that makes the book highly relevant is Chapter 9, which discusses the rules for when to sell. Often, it is not the hardest part to figure out when to buy, but rather when to sell, and in this chapter, 16 sell signals based on technical analysis and five sell signals based on fundamental analysis are discussed.

To assist the reader, the book also provides detailed case studies (Chapter 12) that illustrate the buying and selling criteria. It is interesting because the author uses some of the cases in which he was invested and achieved a return of 14,972%, providing examples of how the criteria are applied in practice. This is quite unique, as many investment books carefully select cases that precisely demonstrate the effectiveness of their strategies or tools. Here, one can see the author’s arguments and thoughts about the cases before he knew they would become super stocks. This significantly enhances the credibility of the book.

In my assessment, the real value of “Insider Buy Superstocks” lies in its investment approach and the various easily accessible criteria. Additionally, the book is written in an easy-to-understand manner, with large font size, good line spacing, and large graphs that are easy to interpret, providing a good reading experience. However, I would like to emphasize three aspects that detract from the overall evaluation of the book. Firstly, the structure itself is a bit messy, and the way the chapters are put together could be improved. Secondly, a bit more time could have been spent on delving deeper into the key criteria. Several chapters are redundant and could have been used to provide more in-depth coverage of the essential technical and fundamental criteria. The third aspect is that some of the criteria in the book do not align. For example, the author describes the “sweet spot” for buying super stocks as being within the range of $5-10. However, in one of the later chapters, this is now changed to $3-15.

Even if one has their own unique investment process and way of doing things or if one is completely new, this book is definitely recommendable. It can be used to supplement one’s investment framework or as a foundation to build one’s own investment framework around. It is rare to find such practical books with successful applications in this world. That, in itself, makes the book highly recommended.


Rating

We have chosen to give “Insider Buy Superstocks” the following rating:

Overall rating: 4/5

Overall, it is a highly recommended book where one learns the criteria for selecting super stocks that can explode in value. Additionally, the book can also serve as inspiration for building one’s own investment framework.

Style: 4/5

It is a relatively easy book to understand in terms of language. It is evident that the author wants to cater to new investors.

Structure: 2/5

The structure is sometimes a bit messy, and it seems that the right place for some of the chapters could not be found. Some of the later chapters could have been included earlier to improve the structure.

Level: 4/5

The level is very good and should be readable even for new investors. Investment terms are used, but they can be understood relatively quickly with some time and focus.

Technical: 4/5

Since the book is aimed at new investors, this is also reflected in its technical level. It should be relatively manageable, even for those without a technical background.

You can order the book from Amazon.com by clicking on the image below:

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