Purple Chips

<p>Acknowledgments xi</p>
<p>Introduction 1</p>
<p>My Background 3</p>
<p>Chapter 1: The Psychology of Investing 7</p>
<p>Singles and Doubles Are Better 7</p>
<p>Tune Out the Noise 10</p>
<p>EPS Explained 11</p>
<p>Chapter 2: Purple Chips versus Blue Chips 17</p>
<p>Finding the Purple Chips 18</p>
<p>Minimum Seven Years of Positive and Growing EPS 18</p>
<p>Smooth and Predictable Growth in EPS 19</p>
<p>Minimum Market Capitalization of $1 Billion 23</p>
<p>Purple Chips versus Common Blue Chips 24</p>
<p>Dilution Is a Value Killer 28</p>
<p>Dividends, or Getting Paid While You Wait 31</p>
<p>Purple Chips Make Money for Investors 31</p>
<p>Keeping It Simple: Th e Purple Chips Model versus Ratio Analysis 35</p>
<p>Con Edison versus Entergy 36</p>
<p>Wendy′s versus McDonald s 37</p>
<p>General Mills versus Kraft Foods 39</p>
<p>Google versus Yahoo! 41</p>
<p>Chapter 3: Understanding and Seeing Valuation 43</p>
<p>Th e Normal Curve: An Odds–Based Approach 43</p>
<p>Th e Shift ing EPS Line: A Quick Gauge of Value 45</p>
<p>Valuation Reset 49</p>
<p>Chapter 4: What Else You Need to Know 55</p>
<p>Earnings Trend 55</p>
<p>Value Traps 59</p>
<p>Valuation Trend 62</p>
<p>Th e P/E Ratio and Growth 69</p>
<p>How to Build a Portfolio of Purple Chips 71</p>
<p>Diversification 71<br /> <br /> Position Size 72</p>
<p>Stop Loss Orders 73</p>
<p>No More Anchoring 74</p>
<p>Market Crashes 76</p>
<p>Do It Yourself 76</p>
<p>Chapter 5: When to Buy and Sell 79</p>
<p>Step 1: Draw the EPS Line 79</p>
<p>Step 2: Set the Buy and Sell Targets 82</p>
<p>Step 3: Adjust the Buy and Sell Targets 83</p>
<p>Buying Checklist 84</p>
<p>Selling Checklist 84</p>
<p>Chapter 6: Practice Case Studies 91</p>
<p>Case Study: Abbott Labs 93</p>
<p>Summary 106</p>
<p>Case Study: AutoZone 108</p>
<p>Summary 117</p>
<p>Case Study: Johnson &amp; Johnson 118</p>
<p>Summary 127</p>
<p>Case Study: General Dynamics 129</p>
<p>Summary 136</p>
<p>Chapter 7: Purple Chips Summarized 137</p>
<p>Endnotes 141</p>
<p>Index 143</p>
<p>About the Author 149</p>