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How to Pick, Value, and Manage Stocks

by David P. Van Knapp

Pub Date: Feb. 6th, 1936
ISBN: 978-1-60528-010-3

Van Knapp offers a friendly and comprehensive system for investing in stocks.

“It may come as a surprise, but one does not have to be a financial genius, good at math, a trained economist, or have an MBA to beat the market,” writes Van Knapp in this cheery, methodical and candid guide for putting your money to work in the stock market. That’s good news. “Of course, nothing in investing is guaranteed,” comes the caveat, but his book is very much centered on risk management. Van Knapp has boiled his system down to three concentrated elements: picking the right companies, choosing the right price and intelligently managing your portfolio. It is a system that requires some attentive engagement in the process, though it’s also streamlined for ease; gratifyingly, much of the information needed to make Van Knapp’s system operational is available for free on the Web. He has concocted a scoring system to help decide which companies to own shares in and awarded points for earnings per share, growth rate and return on equity, as well as more subjective criteria such as admiration ratings and analyst recommendations. His valuation takes into account such matters as price-to-earnings-growth ratios and price-to-cash-flow ratios (information which, again, is readily available on the Web and in print media). Lastly, Van Knapp tenders clear-eyed portfolio management points such as sticking to the stocks with which you have a comfortable acquaintance and diversifying so that a single stock never comprises more than 25 percent of your portfolio. He counsels prudence, not using margins, not shorting stocks and cautions of a few fundamentals to keep in mind, including a good overarching rubric. “Probably the most important rule about making money is: don’t lose it.” With a modicum of oversight and Van Knapp’s advice, readers will know when to sell their “losers” and let their “winners run.”

A levelheaded, lucid guide to stock investing.