Some basic things
to know about using my stock-picking method:
1) You probably should check your stocks on some regular basis....daily
or at least weekly.
2) Results are certainly not
guaranteed. This is an idea that I use that may or may not be profitable but hopefully will stimulate you to generate
new ideas yourself.
3) I may own these issues already
as I also am investing and using these techniques. I will try to remember to let you know if and when I own a stock
and certainly will try to post this for your review....but be aware of this.
4) First place to start screening
stocks is a list of the daily percentage gainers. I often will peruse the list of NASDAQ, NYSE, and AMEX stocks for
this purpose....can use the list on CNN.money site.
5) On this particular site (I
will try to add a link soon), you can 'click' on the stock symbol and this will send you back to the 'profile' section.
This is an important screening step. With my method, I INSIST on positive earnings and revenue growth. This is
NOT a value approach. This involves earnings momentum coupled with a daily momentum analysis. If both earnings
growth and revenue growth are positive, and there is NOT a loss present, I look to the next step.
6) Checking Morningstar.com,
for FREE, type in the symbol in the place for a report. Then, under the tabs for financials you will see something about
a '5 year restated' performance....click on this and you will see a series of bar graphs showing the annual revenue growth/shrinkage
(!) of this company.
--things to look for here include a
CONSISTENT pattern of growth each and every year. (as this website develops I will get some examples for you).
In addition, it is preferable to have the STRONGEST series of revenue growth (year over year) as well as earnings growth....at
least in the teens....and sequential growth included. (this is a LOT to ask of a company but we cannot afford to own
ALL The stocks....only the BEST.)
--in addition, the Morningstar site
will demonstrate free cash flow somewhere about 2/3 of the way down....look for improving free cash flow in the number reports.
If your screening is successful, then
the stock is a BUY. Keep a tight 8% stop-loss on your investments and let the losers go if they hit this stop.
Try not to be doing this in a market trending DOWN...as many of the great stocks you have will be dropping. Once you
are ahead in a stock, you can withstand a correction....usually. But sell on the 8%. Also, start peeling off some
shares if the stock hits about a 30% gain....maybe sell about 1/6 of your shares....and peel again each subsequent 30% gain....using
the money to add to your portfolio with a NEW position. After 4 such sales, you will probably have removed your original investment;
while leaving an equal $ amount still invested. At this point, I would slow down the sales further to gains at 120%,
180%, 240%....etc...for additional 1/6 position sales. I shall try to follow this strategy in my trading account.
If you hit the 8% stop, wait to
replace this position with a new position until you have sold a portion of your remaining positions due to a GAIN!
In that way, you will tend to avoid compounding your losses...and hopefully be buying stock in a better environment!