Financial Zip

It is hard enough to go out and find good companies to invest in. Whether you are out there investing in stocks or options. It is very daunting to accumulate information to find out if the business you want to buy is worth investing. There so much financial information out there that it can be impossible to sort through it all and for those that are not really math people or get all giddy about accounting principles I have a solution.

A few months ago I started to get the Investor Business Daily coming to my house. Up to this point I had been using a couple of other websites to do my research and I was also just paper trading options to really get the feel of how they work. Needless to say I had mixed results some good some bad, but overall the results were not impressive to me.

I started to use the information from the paper. Some examples of companies I picked from the IBD 100. Which is the papers top 100 stocks. So some of the ones that I picked was POT, BUCY, and SID. So I looked at some charts at the beginning of March found some buy points and entered trades. So here is where am at right now because of those trades.

Pretty powerful I was amazed and it completely sold me on the Investors Business Daily.

Here is why this paper is powerful and how it works.

Rating System

This is exclusive to IBD. It breaks it down into 5 parts but the most important is the composite rating. The composite rating is combination of the earnings per share, relative price strength rating, return on equity rating and sales, and accumulation. Click on Image.

This out of all the information collected on Investor Business Daily helps me identify what stocks are doing well and which ones are not.

Stocks Just out of Bases

Building a base for a stock is an important step to identify if the stock has some momentum to break out and really get some gains. IBD will show you the ones that have just recently broken out of their base but are still within a certain percentage of its buy point. One of the stocks I picked from this section was Quicksilver (KWK) and since I caught it out of its base it was up $500 on the trade in a little over month.

Stocks Are Sorted by Sector

A good rule of thumb is if you are trading in a top sector most likely the stocks that come out of that sector are doing well. IBD breaks down the sectors from best performing to those sectors that are tanking. What is also useful is at the top of the sector they put the highest rated stocks according to the composite rating system. Then lists all the other stocks that are available.

The IBD 100

It is the index of the leading stocks trading in the U.S. showing superior earnings, strong price performance and it leads their industry. The general rule is that since this has been established it has greatly outperformed the S&P 500. From my experience it has been the difference in the investing that I have done.

The Rules

These are rules that they have established that help investors know how to get into and get out trades. One rule that they don’t have down here but they talk about is in a trending stock and it is in the IBD 100 especially in the top 20 is buy the stock when it bounces of the 50 day moving average.

1. Consider buying stocks with each of the last three years’ earnings up 25%+, return on equity of 17%+ and recent earnings and sales accelerating.
2. Recent quarterly earnings and sales should be up 25% or more.
3. Avoid cheap stocks. Buy higher quality stocks selling $15 a share and higher.
4. Learn how to use charts to see sound bases and exact buy points.
5. Cut every loss when it’s 8% below your cost. Make no exceptions so you can always avoid huge, damaging losses. Never average down in price.
6. Follow selling rules on when to sell and take profit on the way up.
7. Buy when market indexes are in an uptrend. Reduce investments and raise cash when general market indexes show five or more days of volume distribution.
8. Read IBD’s Investor’s Corner and Big Picture columns to learn how to recognize important tops and bottoms in market indexes.
9. Buy stocks with a Composite Rating of 90 or more and a Relative Price Strength Rating of 85 or higher in the IBD SmartSelect® Corporate Ratings.
10. Pick companies with management ownership of stock.
11. Buy mostly in the top six broad industry sectors in IBD’s New High List.
12. Select stocks with increasing institutional sponsorship in recent quarters.
13. Current quarterly after-tax profit margins should be improving, near their peak and among the best in the stock’s industry
14. Don’t buy because of dividends or P-E ratios.
15. Pick companies with a superior new product or service.
16. Invest mainly in entrepreneurial New America companies. Pay close attention to those with an IPO in the past 8 years.
17. Check into companies buying back 5% to 10% of their stock and those with new management.
18. Don’t try to bottom guess or buy on the way down. Never argue with the market. Forget your pride and ego.
19. Find out if the market currently favors big-cap or small-cap stocks.
20. Do a post-analysis of all your buys and sells. Post on charts where you bought and sold each stock. Evaluate and develop rules to correct your major past mistakes.

Here are some must read sections

The New America - This will give a really good idea of the new ideas and products that cutting edge new companies are producing and may warrant a closer look to see if it is worth investing.

Leaders and Success - This usually highlights someone in business or politics that have had some very important successes in their life and then summarize what they were.

Business and the Economy - Will really give a good pulse of what the economy and what business and

The big idea of using this paper is the ease of use in accumulating important information. You should be able to in about 20 to 30 minutes find some stocks that you could go out and buy in. That are solid good stocks.

The draw back is that a subscription is a little pricey it is about $300 for a little over a year. However if you are a serious investor or are going to be it is worth every penny. If you don’t have the money you can subscribe to the paper for two weeks free or the website for a month. It is very much worth it to just get a look. Click here for a two week free trial.

Summary about the Investor Business Daily

Investors Business Daily is really designed to save you time and give you important investment news.

The sections Investors Corner, New America and Business and the Economy are great sections to find investment ideas.

Investors Business Daily is a very unique stock table that provides and can help you pick potential stock market leaders. The great thing about the tables is they are easy to read and use.

Be sure when selecting a stock you find out the direction and the sentiment in the market by reading The Big Picture and the General market and Sectors sections.

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