Chapter 25
How to Find Investments to Consider
As you read in my first investing book I have 10 cardinal rules of investing that I feel help you make the most profits on your investments. And rule number one is one that should be your starting point when you're considering investments to buy at any particular point in time.
And that basic rule is to only consider investments that are at or near their 52-week lows. And it is very easy to find investments at their 52-week lows in several different ways. The basic way I find investments at or near their 52-week low is the old-fashioned way of looking at all stocks on the New York Stock Exchange and the NASDAQ stock exchange and seeing which stocks, ETF's, closed-end funds that are at or near their 52-week lows
Investments at their 52-week lows should be your starting point before you apply any other criteria to them. Some of the other basic criteria I do apply to an investment is I like one in a solid company, that shows revenue growth, EPS growth and large trading volumes, typically I like to look for ones that trade is least 10 million shares a week.
And of course with any investment that is at or near its 52-week low, I want to see some volatility. So basically I will only look and consider investments that are at their 52-week lows only if the investment shows a 52-week high low difference of at least 100%. So for example if I find the stock that has a high of 15 a low of 5 and is currently trading at 6 that would be one I would consider.
There are many fine tracking tools such as Value Line, Yahoo financial analysis, where you can plug in various factors and narrow down the general list into a few choices. I don't basically do that mainly because I grew up without computers and so I don't find that the most friendly way to do it and I basically like the old-fashioned approach of looking at them considering them and then deciding if him and put him on my monthly newsletter of investments I am recommending for the month.
I basically marry the old way with the new way because even though I'm letting my eyeballs look at all these stocks I am also doing it on a computer. The best place to me to find all of the information I'm talking to you about above like the 52-week highs and lows, the trading volume, whether the EPS is going up is in the Barrons stock tables.
You can find the Barron stock tables very easily at the bottom of their webpage, http://www.barrons.com
Here's what I do every month so you could do the same thing if you want to. Actually rather than doing that I would recommend you become a subscriber to my newsletter is only $15 the year and let me do it for you (and remember your first-year of my newsletter FREE!
I go down to the bottom of the Barron's website and I find stock tables hot link in blue area way at the bottom. Then I click on the stock tables and then the page comes up that shows the New York Stock Exchange and the NASDAQ Stock Exchange and I believe the American Stock Exchange.
Underneath the New York Stock Exchange and the NASDAQ Stock Exchange you will see hot links to the entire alphabet from A to Z. I click on the A on the New York Stock Exchange and look at all of the stocks that start with A that comes up on the screen with lots of other good information including their 52-week highs and lows, the percent of dividend they pay if any, and the EPS for about three years, and the trading volume (typically I look for investments trading at least 10,000,000 shares a week)..
That gives me enough information to decide ones that I would consider good buy candidates as I say in my newsletter. Doesn't mean that's the end of it but it's a good starting point and basically what I recommend after you've decided on a couple that you like is go to your stockbroker's website, the one I always use is TD Ameritrade and you'll find when you do research on stocks and other investments that it's very easy to find lots of additional information.
I highly recommend the S&P Reports that follow a definite format and give you tons of information about any stock that you could ever want to buy. All you have to do once you've put the stock symbol that you want to research into the TD Ameritrade website is scroll down and you'll see the S & P Reports and other reports such as Zach’s and they'll even give you a quick ranking show you what they think of the stock. S & P uses one to five stars with five stars being the highest rated stock.
I don't just blindly go by the number of stars that S & P uses but it is one of the things I will consider. Many times ranking services may downgrade a stock because most research reports are geared to a very short-term period of time. If you can take the long range view you can find many bargains that even analysts are rating low because they don't expect them to do well in the immediate short-term but if you take the view how will they do in the long term you can make a lot of money.
Let me give you another way to check on a stock for the long term so you can get the historical perspective that you need and realizing that history does repeat itself you will feel less wary of looking at the short term prescribed specs of the various stock and you will see that many stocks have risen from the dead and made investors tons of money if they were patient.
Here's the perfect stock to check out and once you see how it did you will be amazed and you will see how using AIM you could have made a ton of money off of the stock. The stock I'm talking about is Crocs which has the symbol CROX. A quick rule of thumb is that if you see a stock with a three letter symbol it is on the New York Stock Exchange and if you see a stock with a four letter symbol it is on the NASDAQ Exchange.
Here's the quick way you can check the history of the stock by checking the monthly prices for say three or four years to see how that particular stock bid over a long period of time. You go to the website – http://www.yahoo.com
When you get to the Yahoo website look on the left-hand side and you will see Finance. Click on Finance. After you click on Finance and the Finance Yahoo website opens up, you will see at the top a little white CGI box that says "Get Quote". And all have to do is type in the symbol for the stock or ETF which in this case is the symbol CROX and then the summary page for that stock will appear on your computer screen.
The summary screen gives you lots of good information about the stock including the 52-week highs and lows the current selling price of the stock, target price for the year which is basically what analysts think the stock of the selling out within the next year and whether the stock pays dividends and the average daily trading volume a wealth of information.
But like I used to tell investors in my classes the key to making profits is what the price of the stock does, not what they actually make, not any fundamentals, not the industry it's in but what does the price do? Is it a volatile stock that tends to be a roller coaster stock which means it goes up goes, down, goes up, goes down, because on all of those down trips you gonna be buying and all of those up trips you gonna be selling and that is the way you make a ton of money.
Okay now you're on the home summary page for Crocs on Yahoo Finance website. If you look on the left you will see a hot link to historical prices. Click on that. You will see that you can check daily, weekly, monthly, or any dividends that the stock or other investment has paid for any length of time that you want. So look at the two dates - the starting and ending date - and pick an appropriate starting date to check the price history.
I recommend you check the monthly stock price for say 4 or 5 years of the stock if the company has been around that long. That will give you a much better indication of how well you can do with a particular stock using AIM over the long-term. Because I always emphasize in my teaching classes and to any investors I have that you have to think of AIM as a long-term investment not a short-term investment. That's not saying you can't make some good profits in the short term but take a long-term view and you will not be disappointed.
Well I will spoil the suspense a little and tell you when you look at the monthly prices for the symbol CROX you will find a great roller coaster. You will find this the stock went from like the $30 price range down to the $1 price range back up to the $17-$20 price range off and on over those 4 or 5 years.
Look at it and you will see the perfect kind of AIM stock that I recommend.
It's been a pleasure writing this for you and finally after 15 years I have upgraded the book and that is thanks to Dragon NaturallySpeaking voice recognition software. Now the book meets my high standards because you deserve the best. I wish you all the best in investing and always remember you have any questions or I can help you please e-mail me at jeffee13@hotmail.com