The “Average Joe's”

ULTIMATEBEGINNER'S GUIDE

TO MAKING A FORTUNE IN THE STOCK MARKET

Adam Mesh

The Adam Mesh Stock Club“the average joe’s stock coach”

Version 2013.AJuly, 2013

Copyright 2014 Adam Mesh Trading Group, L.L.C.

Table of Contents

Introduction: Billy and Barry 3

Chapter 1 Effective Learning Environments 5

Chapter 2 What’s Step One? 8

Chapter 3 Which Stocks do I Watch? 17

Chapter 4 How do I Make Money? 22

Chapter 5 Should I Buy It? 29

Chapter 6 Sounds Exciting! 32

Chapter 7 What’s Your Game Plan? 35

Chapter 8 Sharpen Your Game with Proven Coaching 38

A Glossary of Terms 40A Closing Note from Adam 45

While all attempts have been made to verify information provided in this publication, the Author, Publisher nor any parties associated with the production of this document assume individually or collectively any responsibility for errors, omissions, or contrary interpretation of the subject matter herein. Any perceived slights, misrepresentations or references to, or of specific persons, or organizations is unintentional. This publication is meant to be a source of information specific to the Adam Mesh Trading Group, L.L.C. and is not intended for use as a source of investment advice, specific recommendations, legal guidance, accounting, or tax liability. Information contained herein is not meant to provide advice specific to federal, state, and/or local municipal laws and/or regulations. All users are advised to retain the services of competent professionals for legal, accounting, and tax advice. The purchaser or reader of this publication assumes responsibility for the use of the material contained herein. The information provided within this document is meant to be informative in nature and within compliance of applicable laws and regulations, be they federal, state, and/or local-municipal, governing and professional licensing, business, advertising and all other aspects of business practice(s) within the United States. No guarantees of return on investment or income are made. Publisher and related parties to this publication reserve the right to make changes. If you cannot accept these terms, kindly return the product. The Author and Publisher assume no responsibility or liability whatsoever on the behalf of any purchaser or reader of these materials. All names used in the relating of stories are fictitious and not meant to describe/reflect any individual or group of individuals

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IntroductionRemember your first time in the pool…….in the deep end? Not a swimmer? How about the first time dad (or mom or Uncle Todd) let go of that bicycle without the training wheels attached? Did you sink or swim? Did you crash the bike and scrape your knees? It could be any of those “firsts,” without the safety net, but all of us have learning experiences in our lives where the safety net was yanked away – sometimes against our pleading!

For most of us, we were introduced into “dangerous” activity with measured (but different) degrees of safety which were managed away to effect success. For my friend Billy, the pool was play-time in the water! He had “Swimmies,” those flotation devices worn on your arms just below the shoulders guaranteeing flotation no matter your swimming ability, or put better, your “floating” style! And Billy happily floated in the pool at the YMCA with the appropriate supervision – either his parents or the lifeguard. It might be said the barrier to his becoming a successful swimmer was a false sense of safety – the pool was, “Play time with the Swimmies!”

Looking back, Billy’s barrier to success1 was a lack of fear for the environment he was in – put differently; he did not understand the dangers in playing in that pool. He had a false sense of safety happily depending on his Swimmies to frolic in what to him was a liquid sandbox!

Billy’s parents were smart, loving parents; presumably allowing the learning process to evolve in a controlled environment – learning to swim under parental and lifeguard supervision with his Swimmies at a rate that would play out with no real goals speaking to the danger of water, structured swimming lessons and safe practices around the pool – in and out of the water. He was eventually allowed to shred his Swimmies (after 2 years) still under supervision in a controlled environment. His parents were often seen as the “strict,” parents, never allowing Billy to stray too far from their method child rearing – he always resented those rules!

Years later, another friend of mine and I were reminiscing on being kids and learning to master feats of unforeseen danger risking all to be rewarded with seemingly limitless freedoms! His story was his experience on learning to ride a bicycle. Before Barry was allowed to even get on that bicycle, his Dad walked the street with him – all the way to the school he would be riding to, spoke to him of the cars he would be sharing the road with, instructed him on the rules of the road and even enrolled him in an after-school safety training class preparing kids for what to expect, look out for, and how to ride defensively, always walking your bike across intersections – even taking on the responsibility of mentoring younger kids in observing the appropriate safety rules of the road. All this before they even agreed on what bike Barry was going to earn!

Over the years, I’ve frequently contrasted Billy’s and Barry’s learning experiences (and) especially in my coaching role today, I’ve come to learn a couple of lessons from their learning experiences. In fact, here at The Adam Mesh Trading Group, we’ve developed and integrated some of these techniques into our training. I use the techniques to this day coaching folks just like you in our One-on-One Coaching Programs. I do it; my coaches do it. But let’s return one more time to Billy and Barry! In Chapter 1, we’re going to dissect Billy and Barry’s experiences a bit more. I think you’ll get

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1  Success  in  Billy’s  situa2on  would  be  the  understanding  of  the  dangers  of  water  and  learning  to  swim  to  compensate  for,  even  defeat  the  danger  should  a  bad  situa2on  occur  in  the  water.

much from it. Before we move to Chapter 1, allow me to finish their respective stories and add some color to each.

Billy was not only unaware of the danger associated with water – especially the deep end – because of what might be seen as an over-protective learning environment; Billy did not develop the confidence to push his limits in other areas. As a teen, Billy’s barrier to success was a lack of understanding the environments he encountered throughout his youth, thus impacting his confidence. He never wanted to push hard to reach a goal. Metaphorically speaking, it was easier to depend on his Swimmies to keep him afloat – oblivious to the lurking danger throughout high school. Billy was always happy to depend on others to get him through situations and never really understood independence, responsibility and self-discipline until he left for college…… 2,500 miles away from home! I always wondered if there was some kind of statement Billy was trying to make when he moved across the country to go to school!

For my other friend, Barry (the confidant one), training wheels were his only barrier to success, and because of his confidence, they were gone in less than a week! Barry was in that garage his first week, stubbornly determined to prove his ability and earn the subsequent freedom associated with 2-wheeled mastery. Barry also learned to operate a wrench early on in his childhood, decoupling said training wheels from their rear wheel mounts in less than 15 minutes!

Barry’s mom and dad encountered numerous surprises in those days, always involving bicycles – later, dirt-bikes – and then motorcycles – all with 2 common denominators: some scraped paint and a couple of bruises – once a broken bone!. But each time Barry learned a little quicker than his peers. He wasn’t afraid to fail – but he clearly understood that and took the appropriate safety measures pushing his comfort zone, building his confidence early on in High School. He was really a very good rider – but always with helmet, gloves, the leather protective wear.

As adults (hopefully) we eventually learn that any potential reward can be associated with some degree of risk. Billy is now a decent swimmer teaching classes at the YMCA downtown, swimming many laps a week to stay in shape. Barry still enjoys his motorcycles and his peers consider him a safe, seasoned rider. His advice and skills are still sought by those wishing to “Learn to ride.” In each case, both are now considered “Successful,” even experts in their recreational activities. There are lessons to take away from both Billy’s and Barry’s experiences.

In Chapter 1 we’re going to dissect Billy and Barry’s learning experiences and illustrate for the reader the components of effective, productive learning environments. We’ll reinforce some of the observations above and overlay those experiences onto a methodology on how one should initially approach the stock markets. Are you ready?

Let’s begin!

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Chapter 1Effective Learning Environments

In the introduction we shared the experiences of 2 friends, Billy and Barry, and the individual learning methodologies in swimming and biking. In Billy’s case, there was a more controlled environment within which he eventually learned to swim. After 2 years, Billy finally learned to swim for the first time, in that, “controlled, safe environment.” Either a parent or swim instructor gave him lessons on the different strokes and the proper breathing techniques. But for years, Billy was never allowed in the pool unsupervised and without his Swimmies – it was just a fun place to float and splash around where he had no worries.

Using Billy’s experience, one could conclude since he was dependant on external flotation devices in the pool, he actually had a false sense of security. Did Billy ever learn how dangerous pools can be? To Billy, the pool was always a fun and safe place – anytime he was in, he was happily floating with his Swimmies, splashing about without exerting any effort.

The problem with Billy’s experience is that he was introduced to the pool as a fun place – the dangerous component was seemingly not addressed. The only way for Billy to be truly safe in the water is by learning to swim – and in time, he did.

In Barry’s example, because of the confidence gained from his methodic introduction to riding a bicycle, he was willing to push his comfort zone stripping the training wheels from his bicycle sooner, rather than later. Barry took initiative in his learning experience and understood (presumably) that taking off those trainers could result in a scraped knee -his risk, but he was after the reward of mastering the operation of his new bike. Barry didn’t know it at the time, but he was inadvertently learning the concepts of risk/reward. At The Adam Mesh Trading Group, we put this very same concept into play in our one-on-one coaching and use it in every trade we make!

We can take away a couple of specific lessons from Billy and Barry when we approach the Stock Market. Like the pool down at the YMCA, the Stock Market can be a safe and fun place to be in, when you’re making money! But if you don’t give it the respect it deserves, it can be very dangerous – as we all witnessed twice in the last 12 years – the recent Credit Bubble induced market crash and the dot.com crash at the turn of the century – the real Y2K bug!

Learning to trade the stock market should be approached the same way as if you were learning to swim, or ride a bike for the first time. You should learn in a controlled and safe environment; but first you need to understand the risk and how to manage that risk.

If you accept any advice, depend on a broker, a newsletter or friend to make your decisions on what to buy and sell in the market; isn’t that like Billy using Swimmies and Barry, his training wheels? Are you not in an environment with a false sense of security? Absolutely! You are relying on external, potentially wrong - possibly even dangerous (in terms of financial risk) sources for financial decision-making support.

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Taking the above point to the next level, if you depend on someone else for where and when to buy something, does it not follow you would be equally dependent on them for advice on what and when to sell?Perhaps you have been working with a broker or following a subscription service with some success. What happens when the broker moves on, has a bad day or is not available when the market - your stock(s) start falling?

By the time you realize how dependent you are on them, it’s too late! At that point in time, you’ve effectively taken off your Swimmies in deep water before learning how to swim!

We’ve seen two stock market crashes in 12 years.Are you prepared for the next one?

The only way to successfully trade the market is to take personal responsibility and learn how to systematically trade like professionals – like I do, like we do! It’s your responsibility to learn to trade successfully the same way my extended family, my teammates and associates have been doing every day for years at The Adam Mesh Stock Club!

You can do this. You have to do this!

Just a few years ago the technology to trade like I and my teammates have access to (for free!), the information access and tools we use were not available to “Average Joes.”

But there has been a paradigm shift. In the 12 years we witnessed 2 stock market crashes, we have seen the capacity to watch full length movies on a piece of technology no bigger than the old “Spiral Notebook,” so common in every kid’s school supplies kit – at least when I was a kid.

Search Engines allow us to ask any question from our computer and have answers presented immediately on our screen.

We can access any piece of information publically available on any entity, any person, and yes, any stock instantly.

Today we have tools available that allow you, me, any “Average Joe,” the capacity and ability to be one of the new “Market Makers” of our time. No longer are we dependent on information filtered by a brokerage, a newsletter deadline or submitted as an “objective,” stock pick. At Adam Mesh, we offer professional traders who want to share mine and their trading experiences with you. Yes, we offer one-on-one coaching with professional traders who trade their own accounts on a full time basis. We believe anyone deciding to enter the trading arena needs tools, experience and effective coaching. But let’s get back to the basics.

You want to swim? Lose the Swimmies and get a swim coach! You want to learn to ride a bike? Push your limits, your comfort zone and loosen those mounting bolts! It’s also true that to become a successful trader you need to develop a system, preferably under the tutelage of a professional. You

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need to push yourself past your comfort zone – and willing to fail; yes, I said willing to make mistakes! Because where are the best lessons learned? From daring to fail!

Right now, today, I challenge you to dare to fail!

OK, now that I have your attention; yes you do need to take control of your trading. This should be done after you learn the basics of trading successfully, consistently. After you know when to buy and when to sell and have a full understanding of the risks involved, only then should you enter a trade. Ideally, you should have someone coach you (so) that you are fully prepared for your first trade.

The purpose of this guide is to introduce you to the stock markets and show you a safe and productive way to approach them. If you’ve never looked at stocks or paid attention to the markets then you are about to be introduced to a whole new world.

The rest of the guide is broken into chapters that address the most common questions I and my teammates have received professionally and in social situations over the last several years.

My intention is to share with you the answersto the questions we get asked the most,

all concisely presented in:

The “Average Joe's” ULITMATE

BEGINNER'S GUIDETO MAKING A FORTUNE IN THE

STOCK MARKET.

Let’s get started!

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Chapter 2“I don’t know what to do. What’s ‘Step One? Where do I start to understand the basics of trading?”

If you wanted to make someone feel comfortable about swimming,what’s the first step you would do?

I was a life guard in high school and gave many swim lessons (Billy really was a friend of mine!). Before any of my trainees even got into the pool, the first thing I did was take my students to the pool to observe. My goal was to introduce the swimming environment to them by first watching what was going on in the pool. I wanted them to get an idea of what to expect – an “introduction to the environment.”

Stock Markets

As your trading coach, I recommend a similar approach. I want to first introduce you to the various markets, how they were created, discuss their evolution and help you understand what occurs in a “Stock Market.”

There are dozens, if not hundreds of markets worldwide trading all kinds of assets essentially 24 hours a day. Let’s begin by narrowing our focus to the New York Stock Exchange (NYSE) and what is known as the NASDAQ stock market.

Together, the NYSE and NASDAQ include almost nine thousand stocks!

The New York Stock Exchange is located at 11 Wall Street in lower Manhattan, New York City. It is the world's largest stock exchange measured by (the) market capitalization of its listed companies. It is the oldest stock exchange in the United States known for its creation over 200 years ago under a Buttonwood tree in Lower Manhattan – so the story goes!The NYSE is currently operated by NYSE Euronext, the entity formed by the NYSE's 2007 merger with the electronic stock exchange, Euronext. The NYSE still operates a trading floor also located at 11 Wall Street. The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978, as was the 11 Wall Street building. The “NASDAQ” Stock Exchange originally stood for National Association of Securities Dealers Automated Quotations. It is the largest electronic (computer-based) stock market in the United States and second largest (based on market capitalization) in the world. As of January 13, 2011, there were 2,872 listings. The NASDAQ has more trading volume than any other electronic stock exchange in the world. It was founded in 1971 by the National Association of Securities Dealers (NASD), who subsequently divested themselves through a series of sales in 2000 and 2001.It is now owned and operated by the NASDAQ OMX Group, whose stock was listed on its own stock exchange beginning July 2, 2002, under the ticker symbol NDAQ. The NASDAQ OMX Group

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controls and operates the NASDAQ stock exchange in New York City – the second largest exchange in the United States. When the NASDAQ stock exchange began trading on February 8, 1971, it was the world's first electronic stock market. Because of the digitalization of trades, access to buyers and sellers was dramatically increased effecting increased liquidity and subsequently, the NASDAQ helped lower price spreads - the difference between the buy and sell (bid and ask) price of the stock.The NASDAQ originally consisted of stocks that were from either the technology or bio-technology (biotech) industries. Over the years, the NASDAQ grew exponentially and now covers all economic sectors (we’ll discuss sectors in a few minutes). In addition, the NASDAQ became a more “accepted” stock market by adding trade and volume reporting and automated trading systems. Its main index is the NASDAQ Composite, and has been published since the creation of the exchange. An interesting evolution of electronic trading occurred in October, 1987. Until 1987, most trading (no matter the exchange) occurred via telephone, but during the October 1987 stock market crash (more on that later), market makers - the third parties that maintain an inventory of company stocks to provide liquidity - often didn't answer their phones. To counteract this, the Small Order Execution System (SOES) was established, which provides an electronic method for dealers to enter their trades. NASDAQ now requires market makers – those 3rd party institutions maintaining stock inventories - to honor trades over SOES. In general, to qualify for listing on an exchange in the United States, companies must be registered with the United States Securities and Exchange Commission (SEC), have at least three market makers (financial firms that act as brokers or dealers for specific securities) and meet minimum requirements for assets, capital, public shares, and shareholders.

Market Indices

Traders follow different indices to monitor the overall price movements in a market – the specific stock market’s index. There are 3 major indices that most traders (in the United States) follow: The Dow Jones Industrials Average (the DJIA), the aforementioned NASDAQ Composite (the NASDAQ), and the S&P 500. The Standard & Poor’s 500 (the S&P 500) is a basket of 500 stocks covering all sectors of the economy. The Dow Jones Industrial Average is one of several stock market indices originally created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow.

The DJIA is the most covered index in the media as well as the oldest, so let’s begin our discussion of market indices with the DJIA to better understand the most widely followed index in the United Sates; to provide some history, significance and the evolution of the DJIA since its inception.

First, some history: Mr. Dow and his associates compiled the index as a way to gauge the performance of the “industrials” component of America's stock markets. First published May 26, 1896, the DJIA (the “DOW”) represented the average of twelve stocks from various important American industries. Of those original twelve, only General Electric remains part of the average.

The other companies that composed the DJIA Index in 1896 were:

• American Cotton Oil Company• American Sugar Company

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• American Tobacco Company• Chicago Gas Company• Distilling & Cattle Feeding Company• Laclede Gas Light Company• National Lead Company• North American Company• Tennessee Coal, Iron and Railroad Company• U.S. Leather Company• United States Rubber Company

Due to numerous evolutionary phases, today, the DJIA consists of 30 of the largest and most widely held public companies in the United States. The "industrial" portion of the name is largely historical – indeed many of the 30 current components have little to do with heavy industry. In 1916, the number of stocks in the DJIA was increased to twenty, and finally to thirty in 1928.

When first published, the DJIA stood at 40.94. It was calculated as a direct average, by first adding up stock prices of its components and dividing by the number of stocks. Many of the biggest percentage price moves in the DJIA occurred early in its history, as the nascent industrial economy grew exponentially. The index hit its all-time low of 28.48 during the summer of 1896, and the largest one-day percentage drop in the history of the DJIA occurred on December 12, 1914, 24.39%, after a multi-month NYSE hiatus brought on by World War I.

Under the current model, to calculate the DJIA, the sum of the prices of all 30 stocks is divided by a "divisor," which is published on the Chicago Board of Trade's website. The divisor is adjusted when stock splits, spinoffs or similar structural changes occur to ensure such events do not impact the relative numerical value of the DJIA. The initial divisor was the number of component companies; the calculation was a simple arithmetic average. The current weight-adjusted divisor is less than one.

Because (or perhaps in spite of) the DJIA being a weighted average of stock prices, it is more strongly affected by relative changes in performance of high-priced stocks than by lower-priced ones. For example, a 100% price increase of a $1 stock would have the same effect on the index as a 1% price increase of a $100 stock, even if both companies had the same market capitalization.

Because of this, “price weighting,” the higher-priced stocks have a greater absolute "weight," and therefore a higher value in the index. A list of the effective weights of each component is published daily by Dow Jones.

The companies represented in the DJIA are occasionally changed as market conditions warrant; they are selected by the editors of The Wall Street Journal. When companies are replaced, the individual weightings are adjusted so that the value of the average is not directly affected by the change.

As of this writing, the following companies comprised the DJIA (Note each company’s primary listing exchange, trading symbol and economic sector is included):

• 3M Co. (NYSE: MMM) (Industrial Goods)

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• ALCOA Inc. (NYSE: AA) (Basic Materials)• American Express Co. (NYSE: AXP) (Financial)• AT&T Inc. (NYSE: T) (Technology)• Bank of America (NYSE: BAC) (Financial)• Boeing Co. The (NYSE: BA) (Industrial Goods)• Caterpillar, Inc. (NYSE: CAT) (Industrial Goods)• Chevron Corporation (NYSE: CVX) (Basic Materials)• Cisco Systems, Inc. (NASDAQ: CSCO) (Technology)• Coca-Cola Co. (NYSE: KO) (Consumer Goods)• E.I. DuPont de Nemours & Co. (NYSE: DD) (Basic Materials)• Exxon Mobil Corp. (NYSE: XOM) (Basic Materials)• General Electric Co. (NYSE: GE) (Conglomerates)• Hewlett-Packard Co. (NYSE: HPQ) (Technology)• Home Depot, Inc. (NYSE: HD) (Services)• Intel Corp. (NASDAQ: INTC) (Technology)• International Business Machines Corp. (NYSE: IBM) (Technology)• JPMorgan Chase and Co. (NYSE: JPM) (Financial)• Johnson & Johnson Inc. (NYSE: JNJ) (Healthcare)• McDonald's Corp. (NYSE: MCD) (Services)• Merck & Co., Inc. (NYSE: MRK) (Healthcare)• Microsoft Corp. (NASDAQ: MSFT) (Technology)• Pfizer, Inc. (NYSE: PFE) (Healthcare)• Procter & Gamble Co. (NYSE: PG) (Consumer Goods)• The Travelers Companies, Inc. (NYSE: TRV) (Financial)• UnitedHealth Group Incorporated (NYSE: UNH) (Healthcare)• United Technologies Corp. (NYSE: UTX) (Conglomerates)• Verizon Communications (NYSE: VZ) (Technology)• Wal-Mart Stores, Inc. (NYSE: WMT) (Services)• Walt Disney Co., The (NYSE: DIS) (Services)

Intel and Microsoft became the first two companies traded on the NASDAQ exchange to be listed in the DJIA. Cisco (added more recently) also has this distinction.

The DJIA had its first multi-year bull market of the 20th century from 1922-1929 - the so called, "roaring ‘20’s," peaking at just over 380. By July 8, 1932, the crash of 1929 and the ensuing “Great Depression” returned the average to its starting level below 50, almost 90% below its peak and after over 600% run from its inception.

To date, the largest one-day percentage gain in the index, 14.87%, happened on October 6, 1931, signaling a new phase in the market that would prove to be the second bull market of the century, but falling significantly short of the 1929 high. This phase ended in 1937 with the index peaking just below 200. World War II was the driving factor in the markets in the period between 1937 and 1942 indeed proving to be an extended negative phase of the markets.The third bull market of the century (stimulated by the industrial expansion to fight the war) began in May of 1942 peaking 4 years later in May of 1946 ending with another phase of congestion from 1946 to the summer of 1949 as Americans shifted from the military-industrial expansion economy to what is now recognized as the birth of consumerism in the United States and the greatest economic growth

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to date as the United States took its place in the world as the significant economic engine of the world.

Within this 4th bull market of the century, in 1954 the DJIA surpassed the previous high set in 1929 – 24 years later! This phase of the market would eventually peak in January, 1966 at just under 1000 points. On a relative basis, another flat phase of the market followed bottoming in the summer of 1970 before making a run to break 1000 on November 14, 1972, closing at 1,003.16. Where were you in ’72?

Unfortunately, the decade of the 1970’s signaled another phase of unremarkable index performance but was the setting for the next great bull market (number 5 if you’re counting) of the millennia breaking 1000 for good in 1983 soaring to 2700 in 1987.

And then came October 19, 1987 - Black Monday.

“Black Monday” was actually preceded by a pullback of the DJIA to levels reached in the summer months before. On September 22, the market bounced, giving investors a bit of relief….which manifested into a false sense of hope - “My Swimmies worked!! On October 1st, the markets rallied again, but failed to reach new highs. On October 5th, the markets began showing signs of a break.

The markets continued the selloff closing on Thursday at 2355, Friday October 16th at 2246. Two days later, after the weekend, the markets gave us “Black Monday.” On Monday, October 19th, 1987, the DJIA closed at 1738.70, a 36% fall from the high set weeks earlier on August 25th at 2722.40.

However, the markets quickly recovered, as the largest one-day percentage gain since 1932, 10.15%, occurred two days later on Wednesday, October 21st, bringing the DJIA back above 2,000 and in line for a yearly gain.

By 1991 the markets had recovered their losses from the “Black Monday” experience and (they) continued to storm ahead for, “Bull market number 6,” peaking at the turn of the century at 11,722.98 on January 13th, 2000. This was a 570% increase from the 1987 low, represented the (to date) all time high and is now recognized as the dot.com bubble top. What followed was a 3 year bear market – or another “correction,” - depending on one’s perspective.

Bull market number 7 began in 2003 and peaked October 9th, 2007 at 14,164.53 – a 88% move in 5 years. This is now widely recognized as the credit bubble top with the markets being cut in half bottoming at 6547.05 on March 9th, 2009 – a 54% destruction of capital.

Since the crash of 2008-2009, the markets have bounced again, this time the DJIA index’s recovery being demonstrated by a close of 12,273.26 on February 11th, 2011, an 87% bounce from the 2009 low – bull market number 8?

Throughout the history of the DJIA index, indeed the history of the United States, there have been significant points in time marked by pivotal moves in market indices. One specific point in time was the Black Monday episode in 1987 discussed above. Another example: The largest single day point

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drop in DJIA history occurred on September 17, 2001, the first day of trading after the September 11, 2001 attacks. That day, the index fell 684.81 points, or 7.1%. By the end of the week of September 17, the DJIA had fallen 1,369.70 points, or 14.3%.

Index Perspective

A key takeaway here is that news is often reported as specific events in time. But when one breaks down individual stock price movements (or a market indices), what is often presented as a one day event usually occurs over a period of time, unfortunately those events are usually (as documented above in the “Black Monday,” experience) a multiple day move.

Many indices, especially the DJIA are often criticized for being price-weighted averages, which gives relatively higher-priced stocks more influence over the value of the index than their lower-priced counterparts. This produces skewed, if not misleading results - a $1 increase in a lower-priced stock can be negated by a $1 decrease in a much higher-priced stock, even though the first stock experienced a larger percentage change.

The DJIA only includes 30 stocks prompting additional criticism of the average. “Why should the DJIA be used as an overall market indicator when it only tracks 30 stocks?”

Another issue with the DJIA is (that) not all 30 stocks open for trading at exactly the same time in the morning. Only a few open at the start of trading – 9:30 AM Eastern Standard Time - and the posted opening price of the DJIA is determined by the price of those few components that open first and the previous day's closing price of the remaining stocks yet to open for trading; therefore, the posted opening price on the DJIA will always be close to the previous day's closing price and will never absolutely accurately reflect the true opening prices of all its components.

Many critics of the DJIA recommend the market-value weighted S&P 500 index as a better indicator of the wider economy. For this reason, the S&P 500 has evolved to be the preferred index for many watchers of markets and traders. The Standard And Poor’s 500 is an index of 500 stocks first published in 1957 by Standard & Poor’s, a financial services, research and credit rating organization company.

Because it includes 500 of the largest companies publically traded in the United States, it is seen by many as a more accurate representation of the overall, “the broad market’s” performance and as such, probably the most widely recognized benchmark to measure a stock’s performance against. It includes companies traded on the major exchanges and across all economic sectors and industries.

What is a Sector? What’s an Industry? How are they related?

Economic Sectors are subdivisions of a macro-economy. Sectors are usually divided in industry and/or business types similar in what they do. Sectors are broken down into industries within a given sector.Each Market Sector is made up of different companies that are buying and selling similar goods and services and is generally in competition with one another. Likewise, industries within sectors generally compete with each other.

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Utilities are probably less competitive due to the less competitive nature of the service they provide, and the government regulation they must work under. Conglomerates are much less common than earlier years for a few reasons; they still exist, but just not as many as they did decades ago. Because of monopolistic and/or deregulation, most have broken up their organizations into smaller entities. Some were broken up in years past because they might have been perceived to be too large, yielding monopolistic control in their markets to allow free competition.

I think they just are becoming extinct, much like the dinosaur – too big to manage efficiently. In the United States there are 9 sectors that are generally accepted as the primary list. Following is a list of Economic Sectors recognized in the United States – and generally across the world in matters of economic activity.

• Basic Materials• Conglomerates• Consumer Goods• Financial• Healthcare• Industrial Goods• Services• Technology• Utilities

Except for conglomerates and utilities, there are numerous industries within each sector. Some known are included in the 9 sectors are listed below (Note: This is not an all-inclusive list of industries – merely a sample representation of industries within a sector):

1) Basic Materialsa) Agriculture Chemicalsb) Major Diversified Chemicalsc) Goldd) Numerous Oil and Gas Industriese) Steel and Iron

2) Conglomerates

3) Consumer Goodsa) Appliancesb) Automobile Manufacturingc) Beverages – 3 Industriesd) Electronic Equipmente) Personal Products

4) Financialsa) Many Banking Industries – broken down by regionb) Many Real Estate Investment Trusts (REITS) – broken down by property type

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c) Life Insuranced) Investment Brokeragese) Savings and Loansf) Property and Casual Insurance

5) Healthcarea) Numerous Drug Related Industriesb) Hospitalsc) Medical Equipment (several distinctions)d) Medical Practitionerse) Biotechnologyf) Home Health Care

6) Industrial Goodsa) Aerospace/Defense Products and Servicesb) Cementc) Diversified Machineryd) Heavy Constructione) Lumber, Wood Productionf) Heavy Equipmentg) General Building Materials

7) Services (the largest sector)a) Advertisingb) Air Servicesc) Apparel Storesd) Auto Dealershipse) Broadcasting (Broken into Radio and TV)f) Business Servicesg) Computers – Wholesaleh) Department Storesi) Education & Training Servicesj) Entertainment/Restaurantsk) Shippingl) Railroads

8) Technologya) Application Softwareb) Communication Equipmentc) Information & Delivery Systemsd) Internet Service Providerse) Networking and Communications Devicesf) Multi-Media & Graphics Softwareg) Personal Computersh) Semiconductors – Multiple Breakdownsi) Wireless Communications

9) Utilitiesa) Electric

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b) Gasc) Waterd) Diversified

“Enough with the Sector and Industry discussion!What’s the basic point? How do I apply the discussion

above to the market(s) introduction? How will this help me?”

When you begin your involvement with, when you start your trading in the Stock Market(s); you should begin by watching the DJIA, the NASDAQ and S&P 500 Indices. The DJIA is a sample representation of the stocks making up the New York Stock Exchange. The S&P 500 is a broader representation of the U.S. stock markets across multiple sectors and a broader representation of the U.S. Stock Markets’ collective direction – the collective sentiment in the great Bulls versus Bears wrestling match! Are the Bulls winning; or the Bears? The indices give us both a snapshot in time as well as the overall trend – and speak to us in terms of buying (or selling) opportunities. The NASDAQ is widely seen as the barometer of the technology specific industries because of its heavier weight of technology-based stocks.

So called, “Bull markets” are markets trending higher over time. They are described as achieving a series of “Higher highs and higher lows.” “Bear markets” describe downward trending markets over a period of time – lower highs and lower lows.

If these markets – their indices - are up then the majority of stocks are probably going to be up for the day. If these markets are down, then the majority of stocks are probably going down for the day.

They represent the market’s pulse and through chart study of the indices, we develop trading strategies. By studying the markets via graphic representations – charts – we can identify trends and phases of the underlying markets. Drilling down, we can identify buying opportunities.

Understanding how market indices represent the performanceof their underlying exchanges is the beginning to your understanding

of how particular companies – specifically their stocks – perform relative to specific benchmarks: the market indices!

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Chapter 3“OK, I get the Index Breakdown. You said there are over 9,000 stocks! Which ones do I watch?”

Glad you caught that!Indeed there are well over 9,000

publically traded stocks one can trade!

With the above in mind, how in the world can someone know which ones should be purchased today? Or, should any be purchased today?

With over 9,000 stocks to choose from, the whole process can be overwhelming. What I suggest to new students, to those folks new to the stock markets is to begin by watching stocks that are of particular interest to them. The simple process of picking a company and looking up its symbol is how your real introduction to the market exchanges will occur.

A Stock’s Symbol (or Ticker Symbol) is the code used to identify a publicly traded stock on a particular market. NYSE stocks have symbols that contain from 1 to 3 alphabetic letters; NASDAQ stocks are represented by 4 or 5 letters.

Typically, a symbol has something to do with the actual name of the company but it is not always the case. The stock symbol for Google is GOOG. The symbol for Walmart is WMT.

Simple enough, “What if I don’t know the symbol?”

Makes sense to me – a great question. If you’re brand new to the stock markets, how could you know the symbol? With the instant information environment we all live in, the stock symbol is a mouse click away. All the major search engines have finance areas of their sites. There are also numerous financial websites that offer instant symbol searches. Let’s look at a couple of great ones.

Finding a Stock’s Symbol

When I started trading the Internet was in its infancy. When the Internet became widely available I found and used the Yahoo.com/Finance Site to do most of my research work. Their tools are amazing and I encourage you to spend some time there. In fact, I still use the Yahoo Finance Site on my weekly coaching calls. Many of my students and graduates still use it as well. If you don’t know the company’s symbol you are interested in, all you have to do is type in the name of the company in the “Get Quotes” box and a list of symbols will appear in drop down fashion. Move your mouse to the symbol and click on it. You’ll be presented with the info you were looking for on Starbucks. Clicking on the chart at the right side of the page will bring up a chart you can use to study the price history of Starbucks Corporation – Symbol SBUX.

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One of the favorite sources of publically traded company information used by Adam Mesh coaches is Finviz.com, another free website that provides reams of data and here as well, you don’t even have to know the company’s stock symbol.

Go to Finviz.com. At the right side of the page is a box labeled “Elite” to fill in a company name to find a Ticker Symbol; first you’ll need to pick either the Ticker (Symbol), Company or Profile button that opens up under the “Elite Fill in box.” The “Elite Feature” is a great tool to find information on your company of interest. Enter the name of the company you want to look at and click on the Magnifying Glass to the right of the Fill in box.

You’ll be presented with a list – usually just your single company – as a results page. Click on the company’s symbol and you’ll be presented with a chart and more data than you’ll ever want to know about your company – Starbucks in the first example above.

Now let’s get to a real life example. One day you walk into a Starbucks, or maybe decide on buying a pair of Croc’s shoes – and you discover their new flavor or love the shoes so much you buy a second pair. It’s an incredible new flavor; a remarkably comfortable shoe! You try it and instantly know this is going to be the most popular flavor ever or everyone will be buying these shoes. Maybe you’re a Netflix fan and think they’re going to be the way folks watch TV in the future or perhaps you think that silver is going to be a good investment. Did you know there are Exchange Traded Funds that mimic the price of silver or gold? It’s true! How can you make money on that knowledge – on your belief?

Is it a publically traded company – a stock I can buy and sell? Perhaps an Exchange Traded Fund2? You check one of the websites above and discover their Ticker Symbols. Have a look at their charts and then compare their charts to the Indices we discussed above. In the above examples, we would find the following:

Starbucks Corporation NASDAQ: SBUXCroc’s Inc. NASDAQ: CROXNetflix, Inc. NASDAQ: NFLXIShares Silver Trust ETF NYSE: SLV

Next have a look at the company (or ETF) stock and compare it to the movement of the primary listing index. In other words, does your stock tend to move with the index? How does it compare relative to the to the DJIA moves?

Your stock may move with the overall markets – or it may tend to move against the markets. A key point to understand here is all stocks move individually!

The market indices represent directional moves of the broad market. While your stock might (or might not) typically move with the broad market - because it is an individual stock, in fact it has a “life”

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2  Exchange  Traded  Funds  (ETF):  Exchange  Traded  Funds,  ETF’s  for  short,  are  stocks  that  can  be  purchased  on  a  given  exchange.    They  are  usually  constructed  to  track  a  par2cular  index,  sector  or  commodity.

of its own. It will have its own distinct price patterns and over time you – as a trader - will begin to better understand and identify stock patterns through chart study.

If I told you 74% out of 100 people in a room were wearing red hats and the rest blue hats and one had a green hat, would you be able to tell me if John was wearing a red hat? Could you definitively assert that Paul and George were wearing blue hats?

Of course you couldn’t; there is a good chance – 74% - any particular person in the room had a red hat on…..but, there is a 25% chance they weren’t, but you couldn’t be sure.

There’s a 1% chance someone in the room had a green hat on!

There are many reasons why the company you choose might be moving in parallel fashion to the overall market measured by one of the broad market indices. Indeed your company may be outperforming its benchmark! It could be that your company moves counter to the directional moves of a specific index.

There are numerous reasons your company may be outperforming an index. It might be due to a recent (or anticipated) positive announcement. Maybe SBUX has introduced 5 new flavors or has beaten its expected (projected by analysts) earnings. Perhaps an announcement to expand its territory, opening stores in new markets or even due to a decrease in the price of coffee beans! The positive news could lead to a price pop to the upside! Conversely, unexpected news, (an) earnings miss or the sudden retirement of the founder of the company could result in a stock price “gapping” down in its price in a day.

Sometimes stocks seem to trade in their own universe. Stocks with new ideas, break-through technologies, or new gadgets in new markets can move in hyperbolic swings. As of February 2011, Apple and Netflix have been such rocket ships. Other times a company may have dominance in a market – agriculture stocks or telecommunications stocks in an emerging country can present such situations. While wired telecommunications companies dominated the introduction of the telephone 100 years ago in the United States, similar evolutions are now taking place in countries leapfrogging the copper wire. Cellular tower builders are the copper wire highway builders in countries where it is much more efficient to connect folks via airwaves because of the economic, if not physical barriers to laying copper, even fiber-optic networks. There are always opportunities.

Historically, big buyers or sellers can influence the direction of a stock’s price. If Donald Trump or a mutual fund bought a million shares at one time of NFLX, then it would probably go up regardless of what the market is doing.

Some stocks tend to move counter to the overall market. Who hasn’t seen the Gold commercials? As long as I’ve been trading, there have been the “Gold Bugs.” There are stocks that mimic, or try to mimic the price movements of gold, silver, crude oil, even interest rates on 10 year Treasury Notes! Remember 5 years ago when all the mortgage companies said we’d never see interest lower than 7%? Sooner or later (perhaps by the time you read this) the interest rates will start to climb. How cool is it that there are trading stocks that allow you to benefit from that eventuality? There are!

So, you’re saying, “Market Stocks tend to move with the market unless underlying

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factors - such as news or major transactions - cause the stock to move otherwise?”

The short answer is yes. The accurate answer is, “Statistically, this tends to be true.” If a stock is not a “market stock” then it will tend to trade with a life of its own. Examples of these stocks are the gold, silver and oil based stocks. But there are other situations when stocks can move counter-market due to extenuating circumstances. Because of inflation in the so-called soft commodities (corn, wheat, sugar, coffee, etc., stocks whose products rely on these raw materials will tend to be influenced by the prices of these raw material input costs.

One of my teammates in Florida once told me of the astronomical increases in building supplies after Katrina (August, 2005), compounded by the barrage of hurricanes that hit Florida in the 2004 and 2005 seasons. Not since Andrew in 1992 had Florida and the southeast seen such destruction. The result: Building supplies – lumber, shingles, anything associated with rebuilding – even labor, due to the scarcity of qualified craftsmen - skyrocketed in price and unfortunately led to a flooding of the markets of low-cost, junk materials from overseas suppliers that were not up to code standards. Stocks associated with the quality suppliers did well. Sales at the Home Depots and Lowes hardware stores also fared well from these unfortunate disasters.

Another example of stocks that tend to trade in their own universe can be specific technology, biotechnology and drug stocks. The demand for certain technologies can be the latest rage, Apple comes to mind and folks will bid these stocks to astronomical levels the can dwarf the baseline index – the NASDAQ Composite – used the benchmark this sector.

Biotech and drug stocks can be very tricky as they often are tied to the performance (or non-performance) of a drug they have worked on for years, only to fail Food and Drug Administration (FDA) test passing. These types of stocks can be driven by what we refer to as, “News Bombs,: effectively tanking a stock’s price if the new drug fails, or one of their current drugs suddenly is found to cause serious, unforeseen side-effects.

Finally, I touched on earnings surprises potentially impacting a stock’s price above; the discussion shared in the “Earnings Conference Call” usually same day as the earnings release date can also impact a company’s stock reaction to the news event. For instance, if company ABC is a bread bakery and delivery service and they beat all the earnings expectations by 50%! Then they hold their earnings conference call highlighting increasing fuel, wheat, corn and healthcare cost are going to significantly impact future earnings. That “Guidance” can lead traders to dump the stock because of the company’s future earnings – relative to projected earnings - look much worse on a relative basis.

The key take-away points:

• The majority of stocks will tend to move with the market indices – some closer to a particular index. For example, we compared Technology stocks to the NASDSAQ.

• There are many stocks that can sometimes move counter-trend when using an index as your baseline.

• Some stocks (drug stocks, for instance) are very sensitive to external events, even dependant on a specific announcement(s).

• Stocks can (and do) trade or move on trader expectations and when the actual facts released are higher or lower than those expectations, the stock’s price can be impacted.

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• Unforeseen “News Bombs” can impact prices in both positive and negative ways – the direction of the move depends on the news, the sector and how severe, how long-lasting the news can/will affect the market, the specific stock.

So back to the original question,“How do I choose between 9,000 stocks?

To start, pick stocks that you are interested in. If you’re a coffee drinker you can look at SBUX or Green Mountain Coffee. If you’re computer savvy you look at Apple, IBM, Juniper Networks, NVIDIA Corporation or Western Digital. Are you a farmer? Have a look at John Deere and Monsanto, perhaps Potash Corporation.

Like the basic materials, commodities or oil stocks? Check out Newmont Mining, Chevron, ConocoPhillips or Silver Wheaton. Is entertainment your interest? Have a look at Disney, Netflix, or Comcast.

Remember, if you’re not sure of the symbol, then you look it up on Yahoo Finance or Finviz.com. Not only will this be a good place for you to start, it will lead you to even more ideas. By researching stocks you will inevitably learn about more stocks. If you are reading news about your stocks you might see other stocks impacted by the same news. It’s always good to become aware of stocks in the same sector (that you may not even be aware of). We like to call these, “brother-sister stocks.” Typically stocks in the same sector will have some degree of correlation in their collective movements.

There will be leaders and followers and the more you learn about the stocks and their movements, the more you can profit from the information.

One of my traders, Dave, was always aware of the different stocks in each sector. There was one day where Electronic Arts (ERTS) had bad news. ERTS is a top video game maker and a leader in their Sector Industry.

On this particular day, ERTS started to drop, Dave reacted quickly and sold short Take Two (TTWO), Activision (ATVI) and Sony (SNE). It was a good day for Dave! This works in reverse as well! You notice a stock in a particular industry within a sector showing a positive movement, chances are their brother-sister stocks will jump on the bandwagon!

Good days are in front of you!But you must take action!

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Chapter 4“Good for Dave! But how do I make money?”

Wasn’t that the motivation for purchasing and readingthis report in the first place?

You bet it was!!

My purpose in researching, collaborating with fellow traders and trusted staff was to put together a document in concise presentation to begin the empowerment process through which you will (I hope) take the information presented here and use it as your own “Chapter 1” in the journey to becoming a successful trader.

Let’s review what we’ve covered through Chapter 3:

1) In the Introduction I shared a couple of stories about a couple of youngsters going through typical learning experiences.

a. In Billy’s situation we found his learning environment to be somewhat protective, some might see his as an over-protective environment within which his learning took place. His parents loved him and thought they were doing their best to teach him to swim by easing him into a swimming environment, but Billy never was taught the very real dangers associated with water – subsequently, confidence was never given the opportunity to flourish. To Billy, the pool was primarily the weekend fun place – learning to swim, the key to safe water activities – was presented as a secondary task to be eventually addressed at the pool. The danger was not presented at the beginning – might this have been a catastrophic, albeit innocent oversight? You bet it could have!

b. Barry, however, lived in an environment somewhat more conducive to pushing the envelope. While you can’t drown on a bicycle, one could sure get killed if not careful, yes? Billy was first exposed to the riding environment, took a safety test and then was allowed to ride – his confidence was allowed to build and that same confidence freed him to push the envelope. The result? The loss of his training wheels post haste.

2) We looked at the history of the major United States stock exchange, the NYSE and the history of the longest running index, the DJIA, and we explained in detail the second most important stock exchange in the United States – the NASDAQ.

3) We introduced the major Indices followed by the majority of traders:a. The DJIAb. The NASDAQc. THE S&P 500

4) We then looked at the process for finding the ticker symbol of a given publically traded company that might be of interest and talked about comparing the performance of an individual stock to an index.

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So now you have a list of 3-5 stocks of interest. Begin by monitoring the price movements of your stocks relative to the market that best represents that stock’s sector. If it’s an Industrial or Basic Materials type of stock, you might compare/contrast your stock’s price movement to the DJIA.

If it’s a more consumer oriented or services type of company, you’d probably use the S&P 500 as your benchmark. If a technology stock, use the NASDAQ. If you’re not sure, use the S&P 500 – remember, it’s the most comprehensive.

Your goal should be to watch it (them) daily. How is your stock(s) performing relative to the market indices? Is it moving with the market? Does it move enough for you to make money? Does it move too much where you might not feel comfortable getting involved? Does it even fit your investing (your trading) budget? Google is probably not going to be your first trade!

How does it move? Does it move with the market? Against the market? Is it within your budget? On what exchange does it trade (you may come up with a stock that does not trade in the in the United States)? Assuming you’re going to be trading in U.S. dollars, this is a critical point. These are all very important questions that need to be asked before considering a purchase for a trade – specifically to “buy low and sell high” – from the selection of stocks you might be interested in.

Typically, we begin to understand the answers to all of these questions by studying the price movements and average volume of the stock. The price is the most obvious way to determine whether or not you will trade a stock.

Depending on your budget, you might not be able to afford it. For example, let’s look at the ABC Widget Company whose stock is currently trading at fifteen dollars. This “price” is how much you would pay for a single share of the stock; more specific – for $15.00 you could own a single share of ABC for $15.00. You would own one share valued at $15.00 of what is called the “market capitalization,” the absolute total value of the company.

Market capitalization is calculated by multiplying the current share price by the total number of shares outstanding, or issued. It follows that one hundred shares would cost $1,500.00 and a thousand shares would cost $15,000.00.

So, if you own one thousand shares purchased at $15.00, every dollar that your stock’s price moves up would be a $1,000.00 increase in your portfolio! On a hundred shares, every dollar that a stock moves would be a $100.00 move up in your 100 shares of stock. Traders often refer to a dollar as being a “point,” so you will often hear stock price movements cited as being “point moves.” In your example above, our $15.00 stock moved a point.

Let’s look at the increase in our ABC Widget Company’s stock on an ascending scale based on our $15.00 price:

1 share = $15.00 1,000 shares = $15,000.0010 shares = $150.00 5,000 shares = $75,000.00100 shares = $1,500.00 7,500 shares = $112,500.00500 shares = $75,000.00 10,000 shares = $150,000.00

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Measuring Success: Return on Investment (ROI)

When trading stocks, I always guide my coaches and students to measure their performance against indices, but to gauge the result of the trade on a percentage basis – not to focus too much on the dollars, so to speak.

There’s a clear reason for this. Most people receive their introduction to financial markets through 2 specific situations: Savings accounts and loans. Most of us were introduced to saving money by opening a savings account at the local bank. Savings accounts pay interest on the money deposited.

As well, we get exposed to interest rates the first time we take out a car loan or apply for a credit card, perhaps eventually a mortgage with the promissory note attached. With this in mind, you should measure your success in your trading on a percentage basis – what’s known as the “Return on Investment,” ROI for short. Savings accounts have evolved over time to what most of us call money market funds, or accounts. Anyone aware of savings and money market accounts also know that the ROI on money market accounts is at historically low levels.

Your investment into a money market account is for the most part (with some limits) 100% guaranteed by the Federal Government. The tradeoff for what is almost a 100% risk free investment is the very low ROI reward. There is a direct correlation to the ROI when one considers the risk of investing in a stock, U.S. Treasury Bond or money market fund. Libraries are filled with books and high-level college classes are taught on the risk/reward ratio of different items one can invest in. The choice of investments is not limited to financial markets. Coin and stamp collections, antique cars, real estate, anything that can be considered an investment can be appraised (valued) by its potential asset value (the actual value of the item at a point in time) and either the ROI if the item has been held for a period of time or the projected ROI if the investment was recently acquired. And all of these investments carry different kinds of risks and carrying costs associated with investing in them. Invest in an antique car? You’re going to need a garage and a maintenance carrying cost to cover in determining your ROI when you sell it later for a hoped for profit!

The point is when we trade stocks we measure our success on a ROI basis measured as a percentage of the original investment amount. Our objective is to achieve a ROI that is acceptable considering the associated risk. Indeed risk management is a key component to successful trading, but that’s for a little later in your journey – a bit beyond the scope of “The Ultimate Beginner’s Guide…”

Different stocks present different levels of risk. Look at it this way: the local bank will offer different interest rates (their ROI) on car loans depending on the perceived risk associated with the individual applying for the loan. The longer your credit history - and the better that history is, the lower will be the interest rate offered by the bank, right? Lower risk = lower reward.

Another way to understand risk/reward levels is to compare automobile insurance rates. Remember Barry and his evolution to motorcycles? He did become an excellent rider, but young Barry seemed to collect speeding tickets and had a couple of minor scrapes before he turned 18 years old. In Barry’s senior year, when insurance renewal time came, Barry and his Dad went down to the agent’s office. After reviewing Barry’s traffic record the agent politely told Dad that the premium to keep Barry

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on the family policy would increase 275% due to young Barry’s excessive confidence in his ability to handle a motorcycle.From the insurance company’s perspective, the increased risk associated with Barry’s 2-wheeled antics translated into a mandated increase in reward – or ROI for their agreement to continue to insure young Barry (the risk they assume). To my recollection, the motorcycle was sold that summer; I think when Barry was out of town visiting his cousins! His nest motorcycle was a dirt bike!

So we would expect different rates of returns on our stocks based on their perceived and historical risk. Buying a stock in a 2 month old company working on a new medicine 10 years away from production would clearly carry a high degree of risk. Likewise, investing in a company with a 100 year history of providing catsup in everybody’s refrigerator would probably have a lower degree of risk associated with it – think of a company like Heinz.

There are over 9,000 stocks traded in the United States and you can imagine the wide degree of risk and potential rewards associated with each one. To be clear – each publically traded company has its own unique story, its own risk/reward ratio on a relative basis. Now there are groups that have similar risk/reward ratios. Companies in the same sectors – even industries can have similar risk/reward ratios, but this is not absolute. Just because a group of companies in the oil and gas industry seem to collectively capitalize on oil price increases – deeper analysis might reveal a different story for others in the sector. Consider a group of refiners – they’re in the Oil and Gas Industry, yes? Initially, us “Average Joes,” might think refiners would benefit; they get to increase prices to the consumer, profits increase, the company gets rewarded nicely, minimal risk to the investor expecting decent ROI, right?

The Key is Self-Reliance: Learn the Skills Necessary to Succeed!

Think again. Oil prices go up. This is an increase in costs for the refiners. Indeed they pass these prices on to the consumer. But the consumer has a budget – and a limit that can be spent on fuel, so if gas prices go up, she can’t and doesn’t drive as much as she used to. It’s also a competitive business to be in. Demand would be down due to higher prices at the pump, so gas stations begin to lower their prices slightly to bring in a portion of those drivers who are already driving less. The gas station owners push back to the refiners/distributors and the refiners might grant an incremental drop in their wholesale prices. End result:

• The local gas station gets fewer customers and makes less on what he sells.• The refiners make less as their input costs are higher and they can’t pass all those increases

to their retailers. This is known in economics as price inelasticity. We see higher prices, but they could be even more than they are because competition can affect prices, though slightly.

• Demand is down across the board – so the oil and gas companies are really making less – in spite of, actually because of increasing costs for barrels of crude oil.

• You, me, our neighbors essentially get an increase in our daily costs – our budgets are exceeded and we’re having to share rides, cut back – dollars that may have been the weekend fun money budget now are needed to meet the gas costs.

I wanted to share the above scenario for a specific reason. At Adam Mesh we frequently speak to what we refer to as “News Bombs” in our discussions, trading and coaching. We can’t predict what will happen when so-called News Bombs” hit, but often it is not what is widely reported in the

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everyday news. In my experience, news reports are accurate about half the time, wrong about half the time. We don’t trade on what others are saying. We don’t trade a stock because an e-mail or subscription said this penny stock is guaranteed to be the new Microsoft. We teach the skills – you make your own decisions. We don’t assume energy stocks go up (or down) when crude prices rise. We make our trading decisions based on our own analysis!

The lesson here is to learn the skills, do your own homework as you develop your trading skills and react to what the markets are telling you. We do not predict; WE REACT –

something we teach in our one-on-one coaching.Our coaches understand the difference between what is important in making trading decisions and the noise (usually canvassed on the news shows and the newsletter circuits) is. We don’t predict; we react. We don’t trade on tips, feelings or emotions. We have a system that is proven. It works and has stood the test of time through bull markets, bear markets, flat markets and markets that floundered around for extended periods seeking direction. Best of all, it is a system that can, in truth should be tweaked to fit your trading style. In trading, there’s no such thing as, “One size fits all!”

Drilling it Down - What Specifics to Focus on in Your Stock

Let’s get back to our discussion on when to trade a stock. When you are working through the decision process on whether or not to trade a stock it is important to understand that the price and the price’s volatility associated with that stock will be among the main factors affecting your decision to trade a particular stock. Volatility, for the sake of this discussion only takes into account how much a particular stock’s price tends to jump up and down over a given period, occasionally even during a day’s time.

Probably the second critical factor at this stage of your trading introduction is to know how many shares of your stock are traded on a daily basis in the U.S. based stock exchanges. I say, “U.S.” because many stocks primarily traded on one of the exchanges discussed above are also traded in stock exchanges outside of the United States. All you need to know at this point in time is that we will be trading stocks based in the United States.

With this in mind, we want our stocks to trade enough daily volume (the number of shares trade on a daily basis) to be at least 500,000 shares traded daily averaged over the last 1-3 months – again, on a daily basis. We will usually cap the number of shares traded at 10 million per day. All you need to understand from this range is that:

• We want enough shares traded to provide liquidity. This is to say, if we want to buy or sell a stock at a certain price, we want enough buyers and sellers to facilitate the transaction.

• Conversely, stocks trading in the 20, 30 or 50+ million shares average per day have their own issues – they tend to not provide us enough price movement because they are the equivalent to expecting 50 million folks making a decision – a difficult proposition. Known as a saturated market, the result is usually a stock that tends to not move too much – think Aircraft Carrier turning on a dime; not going to happen!

On a relative, “clinical” basis, there will be more financial risk associated with a 100.00 dollar stock than with a 10.00 dollar stock. Let’s think about it, a 10% move on a 10.00 dollar stock is one dollar. The same percentage move on a 100.00 dollar stock would be ten dollars. The risk and reward are

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greater with the $100.00 stock, yes? Conversely, that is why penny stocks are considered so speculative (dangerous?). We don’t trade penny stocks! Got it? GOOD!

One of the first questions we get asked is,“What stocks, specifically what are the price levels

of the stocks I should begin with?”

Ultimately this is solely dependent on one’s budget. For example, if one of my coaches has a student that enters the program with a $50,000.00 trading account, we’re probably going to look for stocks ranging between $20.00 and $50.00 per share. Should another teammate come to us earlier in their investment/trading career, we usually steer them to stocks in the $5.00 to $15.00 range. Make sense? There are specific risk management techniques that drive these discussions, but for the purpose of this introductory document, the point we want to get across is to trade stocks that fit your budget.

As we discussed earlier, average daily volume is the amount of shares traded in a particular stock on a particular day. Volume represents the amount of activity in a stock on a given day. Typically, the most popular stocks will have the most activity. Apple (AAPL) is one of the most popular brands around and its average volume for the last three months is about 20 million shares per day!

“Hey Adam, didn’t you just say that our preference is500,000 – 10,000,000 shares per day?”

I sure did! This is a great exception to the rule and a great segue into a key point when trading stocks: This is an important key point; becoming a successful trader is:

• 33% science,• 33% art, and• 34% experience.

Anyone watching the news over the last decade could have deduced a lot of money has been made in Apple – and a lot has been lost. In spite of its market capitalization, Apple has had parabolic moves affording many folks the opportunity to make a sizeable ROI in their trading.

Above I put in some parameters to look at when developing a list of criteria to develop a list of stocks to watch for trading consideration. I then (purposely) inserted an exception to the “rule,” to intentionally illustrate that we are dealing with human behavior when we trade stocks. Nobody knows what the markets will do tomorrow. We can develop a set of rules that fit a suitable criteria in terms of overall tradability and work that list down a bit to fit your budget. I made the case for stocks that are “Aircraft carriers,” having a tendency to move slower, but if you were to examine a chart of APPL, you would see some pretty dramatic moves – the Apple Fighter Jet!

The lessons:

• We can develop a set of rules to become successful traders, but• Nothing is absolute.• There are exceptions to every rule and the trading environment can change, therefore

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• Successful traders are successful because they follow their game plan, a plan containing a set of rules, but

• Markets change and there can be exceptions. See bullet point 2.• It follows that traders who are consistently successful are nimble of foot, willing to shift their

focus and style as market and/or specific stock changes warrant.

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Chapter 5“OK, I have a couple of stocks to watch. The price of one looks good, volume looks good, should I buy it?”

There are two reasons to buy a stock – that is to say there are 2 ways to justify the purchase of a stock at a particular price. Historically, the most stock buyers were “investors” and were encouraged by their stock broker…. or friend…. or a newsletter…. or whoever to “Buy and Hold.” Sound familiar? Well, if you were around in 2003 and 2008, you now understand the “Fundamental” approach to buying stocks – examining all the data associated with your stock and determining the analysis of all the fundamental data available to the world says, “This stock is a buy.” So says the analyst. We approach things from a bit of a different perspective. We use Technical Analysis to drive our buy decisions.

Fundamental Analysis

Yes, I’ve heard about this stuff! What is the difference between technical and fundamental analysis? Why does it matter and most importantly, which one should I use?

Fundamental Analysis speaks to an analysis of a given stock on the fundamentals of the company. These may include: Earnings Growth, Sales, Margins, Return on Equity, the quality and quantity of products/services the company offers. How many new stores opened? How many new territories are they going to sell their widgets in? How many new car models are offered? What are the store sales this year versus last year at the same time? How many new items on the menu? How many meals served per day? How many served versus last year at this time? What is the leadership structure – more important, how qualified and respected are the leaders to the company’s success? What is their reputation?

When you buy a stock based only on its fundamentals, it’s because you have a strong belief in the actual company. The leadership is a component of your belief in the company, yes?

Technical Analysis

We have experienced 2 market crashes, the first attributed to the hyperactive “dot.com” bubble and subsequent 51% pullback. Did you know that from January, 1980 to the top of the dot.com boom the S&P 500 Index rose 1,259%? That’s no typo! Next came the 100% climb from the dot.com crash topping out in late 2008 with the credit crises implosion resulting in a 58% decline in the markets!

Many, perhaps most of you took a hit in one or both of these events. At Adam Mesh, using the tools we empower you with, you would not have been subject to the capital destruction resulting from these crashes. In fact, you would have benefitted in that you would have recognized when to get back into the market. YOU would have seen the signs! YOU would have known when to hold ‘em, when to fold ‘em!

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Buy and hold? Are you kidding me? No. We are in a new paradigm of information access. We are in an era where we have instant information that 15 years ago was not available to us home traders. Now, we – YOU can take control of your trading decisions! The events described above should convince you of this - if you have not already been convinced!

Technical Analysis looks at chart study ONLY. Charts represent a snapshot in time of human behavior, humans, flawed as we are, tend to move with the crowd(s). We can study charts to identify patterns that repeat. My trading coaches are expert at this – they live it!

But, back to you, how do you know if you’re in the right stock but it’s the wrong time? You would use Technical Analysis. In Technical Analysis we examine patterns represented by the historical charts to identify repetitive human behavior specific to the buying and selling of specific stocks at a given point in time represented by the charts. We look at resistance levels, support levels, volume and momentum (trends).

When using technical analysis, you throw out any subjective analysis or emotional beliefs about the actual company. You make disciplined decisions based on the stock’s movements. By weighing the risk/reward scenarios, you then make a decision on whether or not to trade the stock.

You might buy a stock for a fundamental or technical reason, stocks should only be sold (and to be truthful, should only be bought) for technical reasons. If you bought a stock because it had great earnings that might be okay but if the stock is tanking and its numbers haven’t changed, then you need to rely on your technical analysis to sell. You also need to examine why you bought it in the first place!

When you purchase a stock you should understandthe potential reward and the subsequent amount

of risk you are willing to accept!

If your stock goes against you and hits your exit point then you sell, regardless of the company’s expectations – end of story. No second guessing. We DO, however log every trade. Was it a good setup? Could I have done better? Was I forcing the trade? We learn from our mistakes, so when our stocks get stopped-out, the first order of business id to determine the dynamics of our trade:

• Did you read the charts correctly?• Was your position of adequate size?• Was your Stop-Loss placed correctly, and• What, if anything would you do differently?

This is how technical analysis can protect you. If you stay disciplined and follow your rules then you will sell when you are supposed to instead of, “Hoping that the street wakes up and realizes that the stock price should be where you think it should be!” No emotion. It also helps when the stock is going in your favor as well! Raise your stops to protect those gains! We can help you with that.

Instead of a simple buy and hold strategy where you may end up giving back 75% of your profits, you can use Technical Analysis to take your profits at the right time. You can always, ALWAYS get back

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into the stock! But let’s say you were right about the company and it increased in price in a parabolic move. First, good for you!

When is it time to sell? There is no easy, short answer, but through Technical Analysis we can study patterns and make educated judgments.

Technical Analysis of the charts, price and volumewill direct your decisions;

it will give you the best chanceto maximize your profits.

Technical Analysis provides its maximum benefit in yourdecision making on when to buy,

how long to hold and when to sell!”

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Chapter 6“Sounds exciting; how much do you think I need to get started?”

Good question! The answer depends on where you are in your life. Are you in a career building mode banking away some dollars every month for your nest egg? Are you retired? Is your goal to be a professional trader? And if that’s the case, do you have resources to provide for yourself with enough remaining to build your asset base? Are you self-made – the bills are paid and you want to trade to augment your income?

Or, like most, are you just an “Average Joe,” wanting to acquire a skill set allowing your empowerment to better take control of your finances, your future, in fact your freedom to be your own boss – determine when you work and how much you want to?

Most reading this fall into a few categories:

1. You’re close to, or are retired and want to add to your income,2. You’re able to save a little each month working and want to acquire a set of tools you can use

the rest of your life,3. You have experience in the markets and went through one, or both of the most recent market

crashes – the credit crises and the dot.com implosion and want to rebuild, or4. You’re a young person, or couple and a smart; you want to take control NOW of your future by

understanding how to make money in the markets.

Which one of the above are you? How much experience do you have in the markets - a lot - None? “Maybe you’ve invested, or traded just enough to get hurt?” Maybe you are a trader but want to up your game. I can help you; we can coach you and elevate your game – no doubt about it! Maybe you’re a young person, with or without a young family and know that to achieve financial freedom, you will eventually have to make your money work for you – instead of the reverse.

But let’s get to the question above, “How much do I need to get started?”

A father of one of my coaches was a pilot in the United States Air Force and he is all about checklists! The guy has a checklist for everything! If you know anything about flying, you know pilots have what is called a “Pre-Flight Checklist.” So let’s go through a checklist to help you determine how much is needed relative to your own situation with our techniques in mind to start trading successfully. Ask yourself:

• How much do I have in savings?• How much am I comfortable putting into the market?• How much do I want to make?• How much capital will I need to hit my goal?• What will be my cutoff?• Is this money I will need in the short-term?

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If you want to trade, then make sure you are in a position to give yourself a solid chance to succeed. If you buy 100 shares of your first stock and the trade goes against you - and then you decide to quit; that is not trading. That’s gambling! We don’t gamble; we trade, period.

Making a decision to become a trader requires a commitment. Anything in life you decide to do, whether it’s a diet, an exercise program, committing to reading a book a week, taking a night class at the local school, learning to fish, scuba-dive, snow-ski, baking, tuning your car or becoming a gardener – anything with a payoff, anything worthwhile in reaching a goal demands a commitment to the work. There is no difference in trading. No secret formula. No magic. Forget about the newsletters! Trading is the utilization of a skill set and with a commitment, you can learn the skills needed to become a trader. We can teach you those skills – better than anyone!

Someone once told me that if you commit to something for six weeks, whether it’s quitting smoking or starting an exercise routine, the exercise, the work, the denial of the temptation – if you go six weeks, you’re over the hump! A six week routine becomes a habit. The habit then becomes a way of life. Soon, you are partly defined by the commitment you have made! You’re no longer a smoker! You exercise daily – look forward to it even! The habit becomes a routine; it becomes a part of your life!

Want to be a trader? Want to become a successful trader?Then right now tell yourself, “I’m going to be a trader!”

“I’m going to be a great trader!”

To be a great trader you will need to:

• Commit to the work – be willing to put in an hour a day, maybe 2.• Commit to 6 months; YES, I said MONTHS, not weeks to hone your skills.• Make up your mind, “I’m going to be a good trader!” Do it!

Now let’s answer the question we began with, “How much do I need to get started?”

From experience in trading and in coaching, I believe anyone, ANYONE starting their trading chapter in their life – I and I should mention this is a chapter in your life journey – should start small. Anyone who knows me has heard me say over and over, “I want to see proof of concept!”

I want that for you. I want you to prove to yourself that you can do this. That’s how I learned! I have traded and made millions of dollars. I have lost hundreds of thousands and through each unique experience, I have learned. I continue to learn every day, from my team, my coaches, especially my students.

You should start with an amount of money that you are comfortable with using that you don’t need to draw from to cover the electric bill. We can begin with as little as 4 or 5 thousand dollars. The ideal amount is about $10,000.00, but if that isn’t what you can afford, don’t be afraid to get involved. I get it; you’re young, starting a family and you don’t have $10,000.00 to start with. That’s OK; the tools we’ll teach you will serve you the rest of your life and help you get that first $5,000.00 to $10,000.00 and then $20,000.00 and beyond. But this takes time and commitment!.

Start with what you can afford.

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We’ll provide the tools that will benefit you the rest of your life!

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Chapter 7“Want to discuss strategies with me, my coaching team, develop a game plan that works for your?”

I’m a big fan of the NFL. One of my associates loves baseball, and he coaches his kids hands-on every summer. Another one of my coaches is also a big NFL fan holding season tickets to the Jacksonville Jaguars since their first year. What’s your cup of tea? Are you a sports fan or perhaps an entrepreneur, a surgeon, engineer or a fire fighter? Perhaps you have a military background or love gardening or home projects. In any of these endeavors, to be successful one must have a plan. To be a successful entrepreneur, one needs a business plan, a sports coach needs a play book, a symphony needs a score and a movie-maker her storyboard. Buildings need blueprints; nowadays skyscrapers are constructed in 3-dimensional virtual environments on computer screens. Gymnasts, golfers and engineers all need a solid plan to apply that builds on their strengths and strengthens their weaknesses.

And they all need supervision, leadership, guidance, and yes, coaching. No matter the discipline, the sport, the challenge, we always begin with small steps. If your grandfather built his own house, he began with an understanding of the individual components of house-building: Simple carpentry, basic electrical wiring, rudimentary plumbing, how to frame a house, wire it, plumb it and then finish it with windows, doors, trim work. One of my coaches still has (in his family) the house in North Carolina that his Grandfather built in the 1940’s. His “Papa” built that house alone, except for some help with the roofing trusses. But he had a plan, a step by step blueprint (penciled out drawings) that guided him through the process. More important, he had years of experience working with individuals who specialized in each of these skills. He learned from them and worked his plan; the house still stands rock-solid 75 years later!

Companies have business plans, financing plans, marketing plans all tied to the specific company goal – with the separate divisions of the organization each working their own marketing plan, financing plan, operations plan. Sports teams have playbooks, but that’s just the surface. Successful teams, from football to car racing all, ALL have a detailed plan to follow and measure their success against.

Traders have game plans as well. They all differ in their styles, but if they’re successful, it’s because they have a plan, a blueprint to follow in their learning, their application and in their routine. That plan is implemented with a coach, a mentor. Like an Olympic Gymnast, a routine is developed, a commitment to practice is made and hard work coupled with effective coaching will lead to successful implementation of the plan and the subsequent fulfillment of the objective. The athlete, the trader uses his, or her coach for support, for feedback and for guidance gleaned from the coach’s experience. With a good plan, a commitment by the trader and the mentoring of an experienced professional coach, the novice trader will indeed become successful in his or her pursuits. In any new venture, it takes a team effort to be successful.

We are your support system – you can be on our team. Actually, we want to be on your team! We provide the guidance, the coaching, the feedback and the experience to elevate your game. Whether

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a novice or a seasoned trader, Adam Mesh Coaching stands alone in our collective ability to determine your strengths and areas of need - and we’re very good at what we do.

We understand the trader’s mentality; we are all professional traders. Nobody matches our commitment to your success because we’ve all been where you are – our reputation speaks for itself. We get it. We want you to be the successful trader you want to be; we stand on our reputation!

“So what about me Adam, how do I get started?”

Let’s get specific. I always recommend starting small. You are going to make mistakes and that’s okay. This stuff isn’t easy, but we make it easy to learn. There’s going to be a learning curve. At my trading firm, we used to tell new traders to expect a 3-6 month learning curve. Don’t be afraid to make mistakes; we train folks to not repeat the same mistakes – indeed to learn from them. Remember what I said earlier? Dare to fail! Be patient and be disciplined.

How do you get started?.

1) Begin by setting your goals, for that,2) You need to have a plan. It should be detailed and fit your style of trading.3) You need to make the commitment to succeed – to dare to fail.4) You need to follow the rules laid out in your plan.5) You need to track your work, log your trades.6) You need to be disciplined in the application of your plan, but7) You need to be flexible enough to change your approach – tweak your tactics as market

conditions change. And they will.8) Finally, you need the appropriate mentoring, the right coach.

A story I like to share is that of a fellow trader – Mark. Mark once came to me with a problem. He was doing well. After a particular 3 week period, he came to me and said, “I get in the office early and do my studies. I determine my trade setups, execute my trades and I’m up $2,000.00 by 10:30 every day! By 4:00 I’ve lost a thousand dollars! Adam, I don’t know what I’m doing wrong!”

What do you think I told him? “Stop trading at 10:30 every day!” $2,000.00 a day is $10,000 a week and $40,000 a month! Why force it? He grinned and for the next several weeks traded 2 hours a day – until the markets changed and he appropriately adjusted his style to fit the market dynamics. And yes, you will change your style as the market changes.

Back to the football analogy, “Let the play come to you.” Football fans will understand that one; when quarterbacks start forcing plays you can pretty much look for interceptions, fumbles, and a loss at the end of the day. Actually, any sports participant or fan can relate to the theme. Allow the game to come to you, look for your opportunities and be ready to leverage those openings to, “Take your shot!” If you miss, be ready for the next opportunity – begin to position yourself for that next opening and the “shot” will present itself – be ready!

Everybody has their strengths and weaknesses. Winners learn to embrace their strengths and work on those weaknesses to turn them into strengths. Weak muscles can be made strong through work, conditioning, practice and effective coaching, right?

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My cousin is one of the best traders I know and he only trades before the market opens and after the market closes. Why would one do that? How can one trade successfully when the markets aren’t even open? Because he’s good at it; he has developed a successful plan. He is disciplined in its application. He doesn’t break his rules.I have asked him on several occasions if it was hard to sit out during the day when there was a lot of action - “NO,” he replied. That’s not what he does. He found a style that works for him and he embraces it. It’s also not surprising that my cousin is both disciplined and successful. The two normally go hand in hand.

After the first couple of months of trading, you will start to get an idea of what kind of trader you want to be. This will allow you to set strategic goals relative to your game plan and tactical rules to achieve the objective.

Setting goals in trading is very important. You want them to be a little bit out of reach but not unrealistic. You should have goals for the week, month and year. These goals should be written along with your rules. This serves to journal your trades. Reviewing your journal’s entries will allow your growth to accelerate.

Setting goals, logging your trades and measuring your success against those goals will force you to be accountable to yourself.

Set your goals. Make a plan – your plan and set your rules.Plan your trades. Log your trades. Build on your strengths;

identify and strengthen your weaknesses.

Be patient; be disciplined.

Trade, measure your success against your goals.

Adjust your tactics, your trading style as needed to achieve your goals.

Dare to fail, but strive for success!

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Chapter 8“Adam, I get it. Have a Game Plan. Monitor the markets, track my stocks against the indices and if I want to succeed, I have to be disciplined. But I want effective coaching to sharpen my game. I want to succeed!”

We’ve covered a lot. We discussed the history of the markets and specific indices. We discussed how to find the Ticker Symbol for a stock that interests you and how to measure it against the indices. We looked at traditional Fundamental Analysis and then contrasted that with more contemporary, more practical Technical Analysis. And finally, we talked about developing a plan and being disciplined in application of your plan.

We then studied winners – at least a component of how winners, “win.” Anyone who has been successful in anything could be categorized in one of the following:

• A talent, a genius, self-driven, motivated, almost unapproachable. Think Albert Einstein.• Born into a family business or gene pool. Think the Mannings in Football, or the Ford

family, even the Kennedys or Bushes in politics.• An “Average Joe,” someone who for a myriad of reasons wants to step up their life plan, to

elevate their game, they are the ones who seek empowerment; control over their future, destiny and life. And they’re willing to work to achieve their goals. They dared to fail!

I’m going to guess that about 3-5% of the population falls into the Einstein category. Maybe another 10-15% is fortunate enough to be heir to the family jewels…. or genes!

But speaking for myself and the majority of folks I work with, we’re in the “Average Joe,” category. Some of us had a nice upbringing with good schools, some not so fortunate. Most of us have worked hard to get what we have; to be where we are. Or perhaps you are beginning that career or at the end of a working chapter in your life moving into a retirement chapter. The point is, for the most part, we share a common background. Our parents worked hard to provide us a bit of a better chance than maybe they had.

I’m reminded of a story one of my coaches shared with me about his dad. I mentioned Coach Gary earlier. Gary’s grandfather became a migrant worker in the 1930’s after he lost his job in the Depression. From those dirt poor roots, Gary’s dad – as a kid - worked hard to live his dream becoming a USAF pilot learning to fly in open cockpit biplanes, graduating to Jet Fighters in Korea, Transports in Viet-Nam and B-52’s throughout the “Cold War.” He retired a Major from the United States Air Force living his own American Dream – to be a United States Air Force pilot! Not only did he become a pilot, he was a sought after instructor throughout his career.

He had mentors. He had commanding officers who believed in him. He learned to fly - and at 19 years of age became a successful pilot in spite of a wall of challenges confronting him. Gary’s dad

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was an “Average Joe,” with a dream, determination and commitment. He made a plan, stuck to his rules and remained disciplined to qualify for cadet flight training and Officer Candidate School to become a decorated USAF pilot.

He retired from the Air Force and continued instructing in retirement coaching students to fly. His students received unbelievable training from a former fighter/bomber pilot! Gary has shared stories with me of flying all over South America with his Dad, losing engines mid-flight, having to land in the middle of the Amazon Jungle to hopefully allow the Crew Chief time and enough McGiver ingenuity to get them back in the air. If you ever get a chance to ask Coach Gary about his childhood exploits, do so. Indiana Jones Stuff! Like his dad, Gary believes he can do anything he sets his mind to – and you know what? I believe him!

I’ve worked with hundreds of beginner traders and I would say my greatest skill is teaching them to minimize their risks and maximize their rewards. If you’re looking to get involved with the market, it absolutely makes sense to do so under the guidance of an experienced trader.

It would have been preferable to have had Billy coached by someone to teach him how to swim before getting in the water. Barry had a more formal instructional environment and he benefited. After all we have discussed – from a team’s play book to a company’s business plan, it makes sense for you to have a plan. More important, you need to align yourself with a proven coaching team to:

• Help you develop a plan to implement in your trading,• Educate you on the markets and the dynamics they present on a daily basis,• Better understand the market indices and their relevance• Learn to screen and pick good stocks that fit your budget,• Better develop your analysis skills to understand when to buy, and• Sometimes even more important, when to sell!

Let’s review; what does this involve?

• We focus on the price and volume of the stock,• We look for signals to alert us on a potential move coming in the stock.• We learn about charts, trends and resistance levels,• We learn where to find news on our stocks and when we must avoid trading them at all and• We remain disciplined in our approach!

I am well known amongst my peers for taking absolute beginners and not only giving them the tools to successfully trade and, in time earning a ROI easily surpassing the investment initially made with us for their education. But it doesn’t stop there. Using the Adam Mesh Stock Club and its resources, we continue the relationship, helping in the creation of substantial, sustainable, and powerful fortunes in the stock market. I like the way Coach Gary once put it to me talking about his coaching, “My graduates become new friends.”

I could list numerous testimonials here, but that is not that focus of this document. I invite you to visit us at adammesh.com for my background, testimonials and lots of information on the Adam Mesh Trading Group. Also be sure to check out TheMeshReport.com for additional information on our organization and some of our, your future teammate’s stories and offerings.

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Take control of your future, empower yourself in your financial affairs!Give us the chance to help you help yourself get to that next level you have been

seeking. Do it; do it now! You won’t regret the decision!

A Glossary and Discussion of TermsStock Pricing

Auction Market: Stocks are bought and sold in what is known as an auction market where there are stocks offered for sale at a given price and stocks are sought after for different purchase price. The agreement by parties on a transaction price is known as price discovery.

• Bid: The price somebody is willing to pay for a stock in an auction market.• Highest Bid: The highest price that someone is willing to pay for a stock at a particular point

in time.• Offer: The price somebody is willing to sell a stock at, also known as the “Ask” price.• Lowest Offer: The lowest price that somebody is willing to sell a stock.• Spread: The difference between the highest bid and the lowest offer.• Print: The price that a stock trades at and the amount of shares traded at one particular

point in time.

A stock does not have to trade at the current bid or offer. Trades can go off in between the bid and offer because of hidden bids or offers. The prints let you know the exact price the stock is trading. If you want to own a stock immediately then you can do so by paying the offer price. That is the guaranteed price where you can own the stock at the point in time you are observing the market. Likewise, if you want to sell a stock immediately, you can do so by selling it at the bid. That is the guaranteed price where you can sell the stock.

Order Types

The basic “Market Order” is an order placed to buy or sell a stock at the current market price, the current bid to sell a stock and the current offer to buy the stock. In most cases, an experienced trader will not place market orders. Traders will have a predetermined price level at which they will want to own a stock and set their order to that price.

• Market Order: This is an order submitted to your brokerage to buy or sell a stock at whatever the current offer (buy) or bid (sell) price is.

• Fill Price: The price that your order is transacted at.• Buy Limit: An order to buy stock at a specific price. Your “Fill Price” might be at that price,

or perhaps a penny or so better.• Buy Stop: An order to buy a stock at a price above the current market price. You will be

filled when the price touches or moves through the Buy Stop price.• Stop Loss Order: An order placed on shares of stock that you already own. Stop loss

orders are used to sell should your stock fall below a price below which you want to own the stock. In practice, these are also known as Stop Limit Orders – once your stock price

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falls to a specific level, you will be sold out of your position at the price specified – in truth at the next “Print” at or below your price – becoming a market order once the Stop Price hit.

• Day Orders: Buy and sell orders usually default to “Day” orders – they expire at the market’s close – 4:00 PM EST

• Good ‘til Cancel (GTC): GTC Orders remain on the books and will either execute when your price is touched or you choose to cancel the order.

When we speak of “Prints,” we are referring to the posted or published price at a specific moment in time; in the case of the digital age and the high speed transactions that occur daily on a given stock, the price prints occur in hundreds or thousands of transactions in milliseconds.

Placing market orders can subject the buyer (or seller) to getting a price far away from the intended price. For instance if there are several market orders placed at the same time and for whatever reason the offer spikes up. In this case, where you may have been watching your stock trade at $10.50 and a news item hits – causing a brief (or sustained pop in the price), you could get the stock at the new current market price, say $10.80 which would be worse for you. In a highly volatile stock you could end up paying much more for your stock by placing a market order. The “Day Order” will stay active until the market close or until it is executed. The GTC order is a working order until it is filled or cancelled by you.

So if you have learned nothing else from this document,you’ve now learned how to control the price you buy your stock at; place Limit Orders!

Most trading is now done from your home computer or laptop utilizing on-line brokerages. When placing your order, the usual default expiration of your order will be at the end of market hours – 4:00 PM Eastern Standard Time - the “Day Order.”

Suppose you’ve found the stock that you’re interested in buying – it fits your investing profile and is in your budget. It has sufficient volume and has an attractive chart pattern that you think illustrates a good price to be $15.00. But the stock is currently trading at $16.40. It’s pretty clear – not impossible – that the price will not hit $15.00 today. What to do?

You know you can place a Limit Buy at $15.00, but as I just shared with you, that order will expire at 4 PM! “Adam, am I supposed to enter the order every morning hoping the $15.00 price will trigger?”

Brokerages allow an order execution method that addresses this! You can enter your $15.00 Buy Limit order on a “Good ‘til Cancel,” or GTC basis. Using a limit GTC order allows you to set your price and allow that bid order to stand in your brokerage account until either the $15.00 price is hit, triggering your order, or you can cancel that order should circumstances change. And all of this is handled electronically using the Internet and your home computer – even your laptop while on vacation!

Buyers and sellers are now collectively managed via computer networks taking the place of market makers and specialists of old.

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• Market Makers: Broker-Dealer firms that maintain inventories of stocks effecting market liquidity. Market makers are the “Middlemen” of the stock trading arena. Market makers are also known as Specialists.

• Floor Traders: Floor traders are members of exchanges that also provide inventory of stocks; in this case they are trading from their own accounts – also serving the market maker function.

Whenever you see images on television of trading floors, you are usually seeing the floor exchange of the New York Stock Exchange. Other exchanges maintaining floor trading are the Chicago Board Options Exchange and various commodity futures markets. Members of these exchanges may be brokerage firms you are familiar with from TV commercials, investment banking firms and individuals “holding a seat on the exchange” – the term is used to identify membership of a particular exchange. “Owning a seat” on the NYSE for example, enables one to trade on the floor of the exchange. That individual might be an agent for a firm or trade his or her own account.

Momentum

We define Momentum as the function of 2 variables:

• The increase in daily volume of a particular stock, index, or commodity and• The upward or downward increase in the price of stocks, indices, commodities correlating

with the point above – increasing volume.

So here at Adam Mesh, we speak of Upward Momentum as being an upward movement in the price of a stock, index or commodity, supported by (the) increasing volume of the number of shares traded daily. Conversely, Downward Momentum is seen as a decrease in the price of a particular stock, index, or commodity also supported by increasing volume of shares traded daily.

Momentum changes – especially sudden moves – are usually short term in nature, but an astute trader will recognize these momentum swings and can often capitalize on these swings. Momentum can be crucial to the success of a short-term trade. If the momentum is sending the stock downwards from $49.00 to $48.00 then it doesn’t matter if you believe (based on your chart studies) that the stock should be $100.00, right? If a stock has momentum and you missed the initial move, the probability of capitalizing on the swing trade decreases the deeper you get into a momentum move. More times than not, the stock will make its move – momentum will sometimes accelerate the move – and then the stock will settle down into a new pattern formation. Momentum trades do work, however if we have identified a level of support, or perhaps a breakout on a stock we are watching. If momentum starts building into our level, that could provide additional confirmation of the level we are tracking. Often, news can drive a stock’s momentum.

Technical Analysis Terms

• Resistance: A price level off which a stock will tend to bounce off of as it increases in price. Resistance is found by looking at historical levels of support and resistance.

• Support: Like resistance in a mirror – a price level that a stock tends to bounce off of when trending down. We look for historical levels of resistance and support to find support.

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• Congestion: Known as consolidation, a trading range or basing, congestion describes a stock that is stuck between levels of resistance and support.

• Breakout: A move out of congestion, breakouts can occur in either direction – up or down.• 52 Week Highs are actually breakouts that occur (in this case) as a fresh 52 week high.

52 Week Highs can carry greater significance when supported by momentum. • Blowoff: The more parabolic move after a breakout that can be in the reverse direction of

the breakout or in the same direction, often supported with momentumMany traders look to 52 week highs as signals for trading opportunities. In a generally up trending market, 52 week highs will have a higher degree of success – they are just breakout trades in an uptrend – as long as the trend is in place the breakout works.

52 Week Highs are somewhat unique. They might be intraday 52 highs and it you are in a position to capture the breakout on the day it occurs, it could, could be a great trade! 52 week breakouts carry greater significance when they are “Fresh” 52 week highs – this is to say if there has been a series of 52 week highs, the probability begins to diminish the stock will continue these moves into uncharted territory. Conversely on a down trending stock if a fresh 52 week low occurs, that might be (another) bearish signal in that particular stock.

What makes new 52 week highs and lows so exciting is that the stock is pushing into unexplored territory. If it closes above the 52 week high, it might confirm the stock is on a breakout move. As stated, if the breakout is supported with momentum, this could, again could mean it is in play.

The New Market Makers

Like I mentioned, most trading is now effected via computer networks. Market makers, specialists, individual exchange seat holders, brokerages, brokerage accounts, their agents and at-home traders – us “Average Joes” – are all now connected digitally and the bulk of stock transactions are done digitally. Computers match bids with offers and transactions are executed at lightning speed.

You, me, WE are the New Market Makers!

“So Adam, why are those floor traders still around anyway?”

Glad you asked! There is a specific,important reason that the major exchanges maintain the human element in the loop.

As reliable, as efficient, as fast as computers operate, there is a very real function folks serve in maintaining that human interaction in the transactions process. While computers are effecting those trades, remember, it is human interaction with all those computers that serve the transactional data input function. This is to say that fingers on a keyboard, or in some cases, voice recognition technology serve to enter those trades. Mistakes can be made.

Major news events – sadly, the best example I can offer up is 9/11 – can instantaneously affect market pricing. When such events occur, there is a “circuit-breaker” type of function that individuals offer up in that the market makers can stop trading in a particular stock should the unforeseen disaster, or colossal mistake occur.

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Even with the ability of floor traders to stop trading in a particular stock, computer networks could still (for the most part) circumnavigate floor traders seeking buyers or sellers effecting transactions regardless of the bid and offer prices on the table. When these “Panics” occur, offers will be put out, but the bids dry up. Bids subsequently fall like a rock – crazy bids are put out for pennies on the dollar – and they get filled! What was a $50.00 stock might get panic-sold for $.25. Yes, that’s 25 cents!

Partly because of the “Black Monday” experience on October 19, 1987, computer and human “Circuit-Breakers” were put into place stopping trading should a market index drop by a certain percentage. The NYSE now may halt trading for an hour should the DJIA fall 10%. Additional halts kick in at 20% and 30% up to, and including halting trading for a day or more. Since floor traders are the first to probably see these moves/mistakes, they can immediately intervene halting trading in the stocks they specialize in – even collectively working with the Exchange Board of Governors to halt exchange trading – but the fallacy was still in that computer routing could still find those 25 cent bids in a “sudden crash.”

A more recent incident occurred on May 6, 2010 – the so-called, “Flash-Crash.” I remember watching the ticker and the TV Business Networks as the DJIA dropped 1,000 points on an intraday basis – 9% - and all this occurred in about an hour between 2:30 – 3:30 PM recovering for a daily net loss of 3%. It never was absolutely determined what caused that “Mini Crash,” though several hypotheses were presented. The common postulation was a trader placed a multi-million dollar order in the Futures Markets some 10% below the current bid and his (what should not have been) trade was filled creating a wave of panic selling over a time spanning less than an hour.

Subsequently, over 21,000 trades were reversed (broken) because the fill prices were not done in an open, free market – there was a problem trade that should not have been filled and there was a series of trades made (based) on an erroneous incident. The market settled and the statistical trading anomalies were broken. The exchanges weathered a storm – and dealt with the problem – reversing trades made based on an erroneous trade.

All traders were shaken, but the system worked!

On June 10, 2010 the Securities and Exchange Commission enacted new rules for stopping trading in any S&P 500 stocks that drop more than 10% in any 5 minute period.

While these electronic circuit-breakers have been implemented, the case for keeping individuals, experienced floor traders, market makers and specialists in the loop to assimilate unforeseen events and react accordingly to serve an important purpose has been made. They are there to prevent a panic selloff on what might prove to be a rumor or mistake instead of real crises. That said, the human interface can also halt trading in the case of a real crises – 9/11 type of scenarios.

With the electronic circuit-breakers and the human link in the chain, markets continue to function in an efficient way while still not entirely dependent on machines or humans. There is a place – a need - for computer power and efficiency and a clear role for individuals’ experience within the entire transactional arena.

I would agree that sometimes there are external forces in play that might be supporting the markets, but guess what? We trade the charts, period. When the market reverses, we can always find stocks

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that run counter to the macro-market indices we discussed earlier! There will always be trades, always. I’m not suggesting you can get up every morning and look at your portfolio, examine your watch list and throw down a couple of trades a day! No way! But, I do submit if you can spend an hour or 2 per day, another 2 hour session sometime during the week to adjust your plan, then you can be successful! As you’ll learn, it’s not about the trade; it’s all about the setup and waiting for the setup to come to you! It’s true!

The markets work; not always how we want them to, but they work!

A Closing Note from AdamWhat I have tried to present in this document is the most concise 42 pages of information my team and I can present to provide that “Beginner’s Guide,” that merely provides a map to the door of success. Specifically, we’ve

Introduced you to the appropriate environment within which to learn.• We contrasted Billy and Barry’s training in their recreational activities.• We dissected their learning environments to better determine the ultimate learning

environment within which learning is accelerated.• We introduced you to the field of play – the markets, with a steep learning curve

combined with a solid introduction to basic market history in the United States. We covered the major market indices, their evolution and what they track.

• We studied the history of the major index: the Dow Jones Industrials Average.• The strengths, weaknesses and relevance of the indices were covered.• We looked at the Sectors Breakdown and some Industries included in the Sectors.

We looked at how to find your particular stock and how to find its ticker symbol and discussed tracking it against an index.

We looked at how to appropriately measure your gains – ROI. We drove home the need to learn skills that empower you to make your own decisions in stock

buying – and selling. Fundamental Analysis was defined; but the case was made to depend on Technical analysis

for buying and selling decisions. To succeed, you have to commit to the time and work required to succeed – no surprise here! I introduced you to Adam Mesh Coaching – winners need coaching; we’re among the best

available, recognized by Wall Street, the Media and thousands of graduates.• You need goals.• You need a plan.• Effective coaching will not only teach you the techniques of trading, it will assist you in

formulating your game plan. Finally, there was a Glossary including

• Stock Pricing,• Order Types,• Momentum,• Technical Analysis Terms,• The New Market Makers!

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Our goal is to provide the best one-on-one coaching available to the hundreds of “Average Joes” (and “Janes”) out there seeking control over their financial future. The Adam Mesh Trading Group consists of individuals of high caliber and experience, each with their own proven track record.

After reading this document, you now know that signing up for newsletters or systems that claim to be able to make you a fortune or paying for other people to tell you what you should be buying and selling is not the way to go. In fact, you knew this before reading this and that’s why you ordered this Guide. You know it and I know it; remember, I’ve been where you are.

The best way to approach trading is to first understand how the markets operate. Next a system should be developed that has that proven track record, but allows the flexibility to fit your particular style and comfort level for risk and the associated reward.

The risk/reward ratio should be easy to understand and the ratio should be easy to apply in the application of your trading plan. The rewards should be easy to measure using ROI calculations. The system should be comprehensive in scope, yet EASY to implement. It should be a system that takes less than an hour or 2 a day to be effective, successful.

Don’t misunderstand me; I don’ pretend to suggest trading is easy. If it were, kids would be foregoing college and trading their college loans. Indeed the markets are always right, they’re powerful and can move in breathtaking swings seemingly against all manner of reason.

When you develop a system of trading that works for you it can be a tool that accelerates the growth of your nest egg. It can provide you with a secondary or primary source of income. It is fast; it is exciting. When taken lightly, it can be very dangerous.

Get involved, but proceed with caution and start small. Make your own decisions. Develop your own plan then stick with it – but allow a degree of flexibility as market situations dictate.

The Adam Mesh Trading Group provides one-on-one coaching by experienced coaches picked by me. Our coaches all trade their own accounts. All our coaches are trained in the techniques I learned over years – and yes, my system provided me, and is helping to provide my coaches and our students financial freedom.

I still trade my own account every day and host a weekly call where I share the ideas and stocks I am trading, or watching - occasionally I’ll trade stocks on the call – demonstrated in real time utilizing the techniques that I use, my coaches teach, and our graduates benefit from.

I want to be your Head Coach. I want to provide you an individual coach that will take you by hand and steer you through the process, the training required to trade successfully. I want to give you access to my weekly calls complimenting your one-on-one coaching experience.

You want to succeed; you demonstrated that in purchasing this Guide. But this is just the appetizer.

Take the next step. Call us at 1-888-217-4347 and I will have one of my program coordinators call you to discuss the coaching options available.

Let’s get started!

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To Your Success,Adam Mesh

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