Success in the higher brackets of achievement is something that
can be had only by taking others along with you. Napolean Hill
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Certainty for Me: Allows me to act as though it is impossible
to fail (Because it is!)
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What barriers are there to stock market certainty? Lack of
knowledge and know how No time to learn Intimidated by the industry
Education expensive Murphys Law
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What barriers are there to stock market certainty? We remove
the barriers and show you a clear path to certainty
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History Repeats Can anyone tell me the one thing that is
absolutely certain in the stock market?
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goes up over time, ALWAYS has, ALWAYS will The
marketALWAYS
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History Repeats Itself
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The Trading System If we know the market always goes up over
time, we need a system that takes advantage of that.
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Exit Here Re-enter Here Exit Here
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Stocks Bonds Mutual Funds Futures/Commodities Precious Metals
Currencies ETFs what should you invest in and why? - Potential for
Big Losses - Low Return/Low Risk - High Fees/Low Return - 24/7 +
Volatility/High Risk - Low Return - 24/7 + Volatility/High Risk -
High Return/Low Risk
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Diversification
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Anyone traded a Penny Stock?
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1)Buy and Hold good companies cheaply and/or Low cost Funds
2)Learn to trade a proven system with Index ETFs keeping losses
small and letting winners run while compounding returns Only 2 Ways
of Achieving Certainty:
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Finding the Best Stocks
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What we will cover Copyright 2013 The Best of the Best The
process of elimination Why use the IBD 50? What we are looking for
in a stock
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Introduction into Value Investing Ben Graham and David Dodd The
Intelligent Investor 1949 Graham taught Warren Buffet at Columbia
Simple, common sense concept Estimate the value and compare to
current price Paint by numbers process to get to a MOS (Margin of
Safety price) Copyright 2013
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4 Stages in Choosing Stocks 1.Find a list of stocks - I Use the
IBD 50 2.Top Line filter using Yahoo Finance analysts ratings.
3.Use the value investing formula to find companies that match the
growth requirements 4.Find the Margin of Safety Price for the
stocks that made it through the first 3 stages Copyright 2013
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What is the IBD50? Weekly list of the top rated 50 growth
stocks Rankings are based on a combination of each companys: Recent
profit growth record IBDs Composite rating, which includes key
measures such as return on equity, sales growth and profit margins
Relative price performance in the last 12 months EPS and RS
(Relative Strength Ratings) +85 or higher tells you that each stock
has stronger earnings and price performance than 85% or more of all
the stocks on the market! Copyright 2013
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Why 85? Because history shows the best stocks typically have
EPS and RS ratings at least 85 BEFORE they launch their biggest
price gains Copyright 2013 IBD 50 = Great Source for Stock Picks As
you can see the 85-85 Index vastly outperformed the broader S&P
500 Index since 2000 by quite a margin
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Process of Elimination Using the IBD50 Take 6 months of IBD50
weekly Data (eIBD Subscription at Investors.com - $269 per year or
$29 per month) They do not keep weekly records, so you have to
download the latest one into excel each week Sort the data into how
many times each stock showed up over the 12 weeks Delete any stocks
that did not show up at least 3 times on the weekly lists Delete
any stock under $30, preference for it to be under $200 Rate using
Yahoo criteria from the latest analysts expectations Use
Morningstar.com to calculate the MOS (Margin of Safety Price) for
each stock (only A & B ranked stocks) Final list must be no
greater than +50% of the MOS price and preferably have a RS and EPS
rating of 85 or above Copyright 2013
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Summary of Yahoo Finance Stock vetting process Step 1 Open up
Yahoo Finance on your browser: http://finance.yahoo.com and type in
a ticker symbol for a stock that you are considering and click Get
Quoteshttp://finance.yahoo.com Step 2 Under Analysts Coverage
heading on the left hand side of the menu, click on Analyst
Estimates. Step 3First Section Earnings Est: Make sure Avg.
Estimate number is at least 0.10 or greater along the row. Make
sure the number of analysts for the stock is at least 3, and
preferably less than 25. Again +25 does not discard the stock, but
it is a black mark. Step 4 Earnings History Section: The rule is
that we are looking for at least three out of the four Surprise %
columns to be positive, preferably the last 2. We want those
analysts to be low balling our stocks EPS results causing them to
pop. Step 5 EPS Trends Section: We want the EPS numbers to be
steadily increasing from bottom to top. Again this is not a deal
breaker, but more of a nice to have. Step 6 Growth Est Section :
Current Qtr and Next Qtr should be +15%, but like EPS Trends,
external factors can influence these numbers. So again, they are
nice to have. However, This Year and Next Year MUST be over 10% or
we discard the stock. Step 7 Growth Est Section : The Next 5 Years
(per annum) MUST be over 10% or we discard the stock. Step 8 Growth
Est Section : The PEG ratio should be under 2, with 1.5 or less
preferred.