I came up with this because I really
wanted to find a better way to invest
and I think this is it playing with
stock market is a volatile game but with
the right tools you just might win hi
I’m Rebecca Braden and welcome to
watchmojo.com and today we’re speaking
with wealth advisor John schwing hammer
about his book purple chips it’s a book
that tells people how to invest in the
best quality the highest quality of
stocks that are out there and so
essentially i call them purple chips
because they’re like the royalty of blue
chip stocks would you mind giving us a
few examples of blue chip companies vs
purple chip companies blue chip
companies would be names like DuPont
AT&T the reason I don’t consider those
purple chips is because those in fact if
you look at the earnings history go back
like 10 years DuPont is actually making
less money per share today than it was
10 years ago and it’s no surprise that
the stock is lower than it was 10 years
ago and the same thing happens with a
company like AT&T ok ATT actually has
improved a little bit but not very much
so if you look at the earnings history
you know they’re pretty much flat line
for the last 10 years we don’t want that
but we want is companies like McDonald’s
okay McDonald’s has it’s a beautiful
earnings history you’ve got you’ve got a
chart of earnings left like good
straight up that’s what you want is it
possible to consistently win at the
stock market consistently so tough one
okay because the stock market has a mind
of its own what you want to do is invest
in the best and increase your odds of
success so I’m not saying that this is a
foolproof guaranteed way to make money
because there doesn’t it doesn’t exist
okay but what you have to do so pick the
best companies and at least you can
sleep at night how do we pick the best
stocks you’re looking at the track
record of these great companies and
you’re looking at earnings history by
doing a quick visual inspection of a
company’s earnings history the earnings
per share as I column you can determine
whether these are companies worth
investing in and it’s funny out of all
the universe of stocks there’s hundreds
and hundreds of stocks out there there’s
only 43 companies on the tsx that fit
our our
teria okay and on the US markets there’s
240 out of 5,000 listed companies okay
so that narrows the scope quite a bit
narrows the field why is it so crucial
to look at earnings per share if you
were buying a business that’s the first
thing you do okay it doesn’t matter how
much sales they produce what matters is
how much earnings we produce stock
prices are driven by earnings okay if
earnings go flat your stock price is
going to go flat if earnings go down
your stock price is eventually going to
make its way down to and and that’s the
whole thesis of this book if you invest
in companies that have rising earning
profiles that have fantastic earnings
track records the chances of making
money are excellent would you say it’s
more important to hit one big grand slam
and make quite a few failures along the
way I talk about that that’s the
psychology of investing and we’re not
made to withstand a series of losses
it’s too hard on the psyche if you have
you know nine losing investments and
then one home run at the end of it you
know that’s it’s all very nice but you
have to be there for that home run at
the end so it’s just too hard morally
and psychologically to withstand a
series of losses so for someone who’s
new to the stock market what kind of
events can have an effect on trading the
stock market is a very unpredictable
animal okay and especially these days
you have companies great companies where
stock prices get decimated because they
don’t they underperform let’s say you’re
vain they change their guidance on how
their business is doing you have to be
careful about those things you don’t
want to be invested in stocks that are
that have a wishy-washy history that can
change suddenly that’s why I look at
pedigree okay you’re looking for the
companies that have the best track
records what is the trick to buying low
and selling high valuation it’s all
about valuation facebook that’s where I
was going next okay Facebook the
valuation I mean they initially started
talking about that at I think it was 28
to 32 and I thought okay that’s not bad
for a company that’s got one set
of the world population following it
people might like that but in fact you
know when they came out and said that
the IPO would be priced at 38 I thought
it was not like so tell us about the
facebook situation what went wrong two
things number one the price of the IPO
was too high so you to make money you
need someone else to buy your stock okay
it’s not going to happen when the
valuation is too high secondly and more
importantly litigation so when
litigation comes up especially in this
market forget it game over do you have
anything else to tell our viewers people
are probably gonna wonder okay where do
I find out about you know the list of
stocks that qualify on this we have a
website purple chips com it’s got
everything you need to know they’re
great thank you very much thank you
wanted to find a better way to invest
and I think this is it playing with
stock market is a volatile game but with
the right tools you just might win hi
I’m Rebecca Braden and welcome to
watchmojo.com and today we’re speaking
with wealth advisor John schwing hammer
about his book purple chips it’s a book
that tells people how to invest in the
best quality the highest quality of
stocks that are out there and so
essentially i call them purple chips
because they’re like the royalty of blue
chip stocks would you mind giving us a
few examples of blue chip companies vs
purple chip companies blue chip
companies would be names like DuPont
AT&T the reason I don’t consider those
purple chips is because those in fact if
you look at the earnings history go back
like 10 years DuPont is actually making
less money per share today than it was
10 years ago and it’s no surprise that
the stock is lower than it was 10 years
ago and the same thing happens with a
company like AT&T ok ATT actually has
improved a little bit but not very much
so if you look at the earnings history
you know they’re pretty much flat line
for the last 10 years we don’t want that
but we want is companies like McDonald’s
okay McDonald’s has it’s a beautiful
earnings history you’ve got you’ve got a
chart of earnings left like good
straight up that’s what you want is it
possible to consistently win at the
stock market consistently so tough one
okay because the stock market has a mind
of its own what you want to do is invest
in the best and increase your odds of
success so I’m not saying that this is a
foolproof guaranteed way to make money
because there doesn’t it doesn’t exist
okay but what you have to do so pick the
best companies and at least you can
sleep at night how do we pick the best
stocks you’re looking at the track
record of these great companies and
you’re looking at earnings history by
doing a quick visual inspection of a
company’s earnings history the earnings
per share as I column you can determine
whether these are companies worth
investing in and it’s funny out of all
the universe of stocks there’s hundreds
and hundreds of stocks out there there’s
only 43 companies on the tsx that fit
our our
teria okay and on the US markets there’s
240 out of 5,000 listed companies okay
so that narrows the scope quite a bit
narrows the field why is it so crucial
to look at earnings per share if you
were buying a business that’s the first
thing you do okay it doesn’t matter how
much sales they produce what matters is
how much earnings we produce stock
prices are driven by earnings okay if
earnings go flat your stock price is
going to go flat if earnings go down
your stock price is eventually going to
make its way down to and and that’s the
whole thesis of this book if you invest
in companies that have rising earning
profiles that have fantastic earnings
track records the chances of making
money are excellent would you say it’s
more important to hit one big grand slam
and make quite a few failures along the
way I talk about that that’s the
psychology of investing and we’re not
made to withstand a series of losses
it’s too hard on the psyche if you have
you know nine losing investments and
then one home run at the end of it you
know that’s it’s all very nice but you
have to be there for that home run at
the end so it’s just too hard morally
and psychologically to withstand a
series of losses so for someone who’s
new to the stock market what kind of
events can have an effect on trading the
stock market is a very unpredictable
animal okay and especially these days
you have companies great companies where
stock prices get decimated because they
don’t they underperform let’s say you’re
vain they change their guidance on how
their business is doing you have to be
careful about those things you don’t
want to be invested in stocks that are
that have a wishy-washy history that can
change suddenly that’s why I look at
pedigree okay you’re looking for the
companies that have the best track
records what is the trick to buying low
and selling high valuation it’s all
about valuation facebook that’s where I
was going next okay Facebook the
valuation I mean they initially started
talking about that at I think it was 28
to 32 and I thought okay that’s not bad
for a company that’s got one set
of the world population following it
people might like that but in fact you
know when they came out and said that
the IPO would be priced at 38 I thought
it was not like so tell us about the
facebook situation what went wrong two
things number one the price of the IPO
was too high so you to make money you
need someone else to buy your stock okay
it’s not going to happen when the
valuation is too high secondly and more
importantly litigation so when
litigation comes up especially in this
market forget it game over do you have
anything else to tell our viewers people
are probably gonna wonder okay where do
I find out about you know the list of
stocks that qualify on this we have a
website purple chips com it’s got
everything you need to know they’re
great thank you very much thank you
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