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Morningstar Publishes First Book on Stocks: 'The Five Rules for Successful Stock Investing'

CHICAGO, Jan. 12, 2004 – "Every investor should add this clear and concise guide to their must-read list.  Morningstar, the renowned authority on mutual funds, does an impressive job outlining the fundamental aspects of how to be a successful long-term stock investor."
– John Rogers, Chairman, Ariel Mutual Funds

From stock expert Pat Dorsey, director of stock analysis for Morningstar, Inc., comes a no-nonsense, easy-to-use guide to successful investing that works.  The Five Rules for Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market (John Wiley & Sons; Dec. 15, 2003; $24.95) debunks classic investing myths that can lead to big losses and outlines a specific, detailed strategy that anyone can use for picking great stocks, reducing risk, finding strong companies, and knowing when to sell at the right time.

Famous for providing investors with unparalleled research, strategies, and insights they need to become successful investors, Morningstar has become known as one of the most trusted sources of independent global investment research and analysis.  The Five Rules for Successful Stock Investing is the guide to the secrets of Morningstar’s approach, and explains in detail how stocks work, how to distinguish the best from the worst, how to build a strong portfolio for the long term, and how to understand a company’s financial statements so investors can separate fact from fiction. 

“The basic investment process is simple,” Dorsey writes. “Analyze the company and value the stock. If you avoid the mistake of confusing a great company with a great investment—and the two can be very different—you’ll already be ahead of many of your investing peers.”

Dorsey shows readers what not to do and how to avoid common pitfalls, as well as how to block out the emotions, pundits, and crowd mentality that can get in the way of smart decisions.  He explains why a company’s fundamentals are the key to unlocking the potential of a stock’s performance, not reading charts or analyst upgrades, and provides a road map to a sound and informed investing strategy based on five core principles:

  1. Doing your homework
  2. Finding companies with strong competitive advantages, or "economic moats"
  3. Having a margin of safety
  4. Holding for the long term
  5. Knowing when to sell

The Five Rules for Successful Stock Investing teaches readers how to master and apply these rules with specific information on how to:

  • Understand financial statements and avoid financial fakery
  • Identify the size of a company’s economic moat
  • Master the language of investing
  • Identify the fundamental ingredients of a great company, such as growth, profitability, and cash flow
  • Interpret how a company runs its business and what it means in relation to the stock’s value

But that’s not all. Unlike other books that only deal with investing strategy, The Five Rules for Successful Stock Investing provides a comprehensive look at every major sector of the market. From banking to health care, software to consumer services, and manufacturing to technology, Dorsey and Morningstar’s team of equity analysts provide a complete guided tour of the industries that matter, identifying which ones are economically superior to others and what makes the most sense for investors. He explains how to separate out the great companies in different sectors, and there is even a “10-Minute Test” that any investor can use to determine if the stock is worth investigating in more detail.

With the market finally rebounding, there is no better time than now to unlearn bad habits and master the principles for knowing how, when, and where to pick great stocks. The Five Rules for Successful Stock Investing is a serious, yet easy-to-use guide that anyone can follow.

About the Author
Pat Dorsey, CFA (Chicago, IL), is the director of stock analysis for Morningstar, Inc. He currently manages the firm's team of 35 equity analysts, and was instrumental in developing the new Morningstar Rating for stocks as well as Morningstar's stock coverage. Dorsey is widely quoted in major business media, and has appeared on CNBC, CNN, and NBC Nightly News. He also appears weekly on the "Bulls & Bears" financial show on FOX News Channel.

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors, and institutions. The company is a trusted source for investment information, data, and analysis of stocks, mutual funds, separate accounts, exchange-traded funds, 529 Plans, closed-end funds, and variable annuity/life subaccounts.

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