Building Wealth in the Stock Market

Building Wealth in the Stock Market provides a complete model for investing successfully and safely in bull and bear markets. As an experienced investor and teacher, I share with readers my very own investment plan - one that has been honed over 40 years and has seen me consistently beat the market and my target rate of return.

Everything in my investing method is fully disclosed simply and with a minimum of market jargon. The central idea is how to manage risk in order to grow capital and secure a stream of dividends. The various risks to be managed are explained, along with strategies for managing them.

Aspects covered also include:

• How to improve your decision-making skills, modelled on the way the best investors think.
• What is needed to succeed and why having an investment plan is crucial for success.
• How to select stocks, using charting and fundamental ratios in combination, to achieve a margin of safety.
• How to manage your portfolio - when to buy, how to build a position, when to cut losses and when to take profits.

The methods are brought to life through case studies based on real investments and the sharing of insights gained from years of experience and research. This book will change the way you think about the stock market forever.

Colin has written a serious and helpful book, kind in its attitude, broad in its scope, and practical in its advice. If you have an uncle in the trading business who is willing to put his work aside and show you the ropes, you might be able to skip this book. For the rest of us, who learn and struggle to make our way in the stock market, Colin Nicholson's new book is an invaluable resource. (Dr Alexander Elder)

Note: Building Wealth in the Stock Market replaces The Aggressive Investor. Most of my basic method has not changed over many years. However, since I wrote The Aggressive Investor, I have refined a few things, notably how I view charts in the right time frame, my maximum risk per stock and my focus on an additional financial ratio. While these things are minor in some respects, they have improved what I do. In addition, I revised the way ideas were presented throughout the book. There are completely new and later case studies, plus examples that were not printed in the original book.

Psychology of Investing

Investment and trading are essentially mind games. Winners succeed because they think differently. Join the winners' circle by learning to avoid the common errors and biases.

• Align your investments with your temperament
• Understand crowd psychology
• Avoid common mind traps, errors and biases
• Make sound decisions at the right time

If the greatest living investor, Warren Buffett, stresses the importance of psychology, it should cause us to pay attention. This is what he wrote in his famous preface to Benjamin Graham's investment classic The Intelligent Investor:

To invest successfully over a lifetime does not require a stratospheric IQ, unusual insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.

So, to master the market we have to learn to master ourselves. Investing and trading involve what I call serial decision-making. Every piece of new information causes us to make decisions, whether to buy, sell or do nothing. We make decisions using our mind and it is here that the battle is fought and won or lost, between investment success and failure.

The Psychology of Investing is organised into four distinct parts:

1. Know Yourself - How to align your investments and your temperament
2. In the Avalanche - Psychology of the market,
3. Stretching our Mind - Common biases and errors in decision-making
4. Catching the Tide - Practical applications of psychology

Reading this book will make you a better investor or trader. The ideas and methods in it will improve your investing and trading decision-making. No prior knowledge of psychology is needed. Everything is explained in a clear, simple style. Technical terms and jargon are avoided or clearly explained in plain English.