Picking the right stock

[absolute1]

hey, im would like how u find an initial stock to research, because there are so many where do u start?

when researching a stock what factors are most important? and how do u determine if it would be a long term or short term investment?

use ratios?
company announcments?
industry indicators?
volume?
price trends/graphs? etc etc


thanx in advance

 

[breaker]

Start with blue chips CBA,BHP,RIO ect learn from your mistakes ect

 

[joea]

Absolute1

How long is a piece a string?

Do you have charting software? If yes does it have a scanning facilitY?
What sort of trader do you see yourself as? Day,position,swing, investor or
Forex?

The traders here can help, but they need a little info. from you.

As a suggestion, go back through the posts in this forum as many answers have been provided. It will not be handed to you on a plate.

Reading material."Sell and sell short " Alexander Elder. This is a short basic book. Go to Amazon to have a look at contents, then see if you can get it at Fishpond. Covers everything for you to start.
Then Stan Weinstein's Secrets for Profiting in Bull and Bear Markets" This one utilises RSC, Relative Strength Comparison to compare "strength stocks" and also shows how to determine the 4 stages of a stock cycle. Basing or cosolidation, advancing, the top and decline. Chart quality is not so hot.

Cheers

 

[againsthegrain]

go to outstanding breakout thread and invest in a few, invest in a lesson

 

[tech/a]

go to outstanding breakout thread and invest in a few, invest in a lesson

Its a tried and proven method.
Most think the secret is being right---picking the right stock/investment.
On the surface thats how it appears.
The real secret is putting yourself in a position to take advantage of a stock moving in the "right" direction.
Hence "A" method ---Breakout trading does exactly that.

There are some who would have done well from the breakouts indicated and others who could have failed dismally.

The second and most important part of the equation is understanding how to skew your trading to a positive expectancy---regardless of method.

With this in mind you can be right 25% of the time with spectacular profits!!

 

[robusta]

There are over 2000 companies on the ASX. As a long term fundamental focused investor I treat company selection a bit like picking a all star team. To my way of thinking why bother picking someone out of club cricket when you can choose Bradman, Lillee, Warne .... or find a young McGrath.

The first filter I use is ROE greater than 25% and debt to equity less than 30% (the less debt the better).

Then look for competitive advantage (think Woolworths, JBH, CBA, CAB...)

Next work out intrinsic value.(Read The Intelligent Investor by B Graham and Valueable by R Montgomery).

Share prices tend to track intrinsic values over long periods of time.

If you can buy a company at a discount to it's intrinsic value and that value is rising into the future (think Woolworths over tha last 10 years) your investments should generate a very sastisfactory return.

Not sure how to answer you question regarding short term investment but the best advice I could give you is pick a procedure, stick to it and constantly review it.

 

[So_Cynical]

My list of things i look for/must have when selecting stocks...in order of importance.

• Must be trading at a substantial low.
• Must be operationally profitable or very soon will be(with good reason)
• Must have zero or very manageable debt.(generally less than 40%)
• Must have a story/business that makes sense to me.
• Must pay a dividend or have high potential to do so or history of.
• Must fit into my overall portfolio (diversification/market cap/risk)
• I very much like buying at a substantial discount to the last capital raising.

 

[shulink]

If you are an investor start with the well known companies that you are familiar with. If you are technical trader, then you can basically start with any stock. Go to forum and see what others are buying to get ideas.

 

[Frankie]

Hi absolute1,

How do I find a list of fundamentally strong companies?

Simple.​

I subscribe to an analyst report.

The firms that produce these reports have the people, the resources and the money to do all the fundamental research I need.

Why would I waste countless hours of my life searching for good companies when someone else could do this for me?

Instead of spending my time researching stocks, I spend it researching the analysts who produce the stock picks!

 

[Julia]

Hi absolute1,

How do I find a list of fundamentally strong companies?

Simple.​

I subscribe to an analyst report.

The firms that produce these reports have the people, the resources and the money to do all the fundamental research I need.

Why would I waste countless hours of my life searching for good companies when someone else could do this for me?

Instead of spending my time researching stocks, I spend it researching the analysts who produce the stock picks!

How do you determine the validity of these analysts' opinions?

 

[Iggy_Pop]

My son has saved a bit of money and wants to get involved with the share market. I ended up giving the following recomendations

AFI - large managed listed funded which follows the XAO roughly. Gives a feel of what the market does.

He was after some profit as well, and after convincincing to do some research he ended up with SDL and PEN.

AFI hasn't done much but both SDL and PEN are up +10%.

How did we/he pick the stock? His focus is on making money and feels he should have bought more of SDL and PEN. Both are companies moving from exploration into production with a large amount of risk but also reward.

You have to start somewhere to learn. My son's next buy will be one of the big banks, after explaining the correct time to buy, so now he has become very interested in charting.

A good start for a 21 year old student, who will soon have a good income as an engineer.

 

[Julia]

Good to hear of your son's interest, Iggy Pop. Did he derive this from any source other than yourself?

I know school curriculums are already very crowded, and teachers already lack the skills to teach what's on there now, but I'd so like to see some financial education included in our high schools.

 

[awg]

My list of things i look for/must have when selecting stocks...in order of importance.


[*]I very much like buying at a substantial discount to the last capital raising.
[/list]

I see this is your lowest priority,

but would you mind expounding on your reasoning about this point

 

[So_Cynical]

I see this is your lowest priority,

but would you mind expounding on your reasoning about this point

I put it in last place on my list because sometimes its just not possible to buy at a substantial discount to the last capital raising, some stocks haven't done a capital raising for quiet some time (many years) and others have rallyed way beyond the point of ever realisticaly bieng able to buy at that point again.

While buying at a discount has sometimes influenced my stock selection its never a priority in my selection criteria...and i don't class Dividend reinvestment as capital raising.

 

[Iggy_Pop]

Good to hear of your son's interest, Iggy Pop. Did he derive this from any source other than yourself?

I know school curriculums are already very crowded, and teachers already lack the skills to teach what's on there now, but I'd so like to see some financial education included in our high schools.

He earnt the money from Mcdodnalds, then vacation work and work placements during his engineering degree. He also did a few music gigs for a around 12 months but found this difficult as the uni workload increased. I supported the essentails and he saved as well as spending money on guitars. Currently has saved over $20k and is looking for something better than fixed term deposit rates which is his reason for looking at share market. Also getting some good input from some of the staff he is working with on his placement.

 

[akkxn]

Hi absolute1,

How do I find a list of fundamentally strong companies?

Simple.​

I subscribe to an analyst report.

The firms that produce these reports have the people, the resources and the money to do all the fundamental research I need.

Why would I waste countless hours of my life searching for good companies when someone else could do this for me?

Instead of spending my time researching stocks, I spend it researching the analysts who produce the stock picks!

A quick google of "free asx analyst reports" yielded a lot of crappy results... is it because I included the keyword free?

 

[moreld]

How do you determine the validity of these analysts' opinions?

Hi Julia,
Bloomberg tracks sell-side analysts recs, you can see them as a list or graphically on price chart.
Though anyone following sell side recs is on a hiding to nothing.

Newsletter analysts generally have portfolios to track their recs. Their returns are generally inflated by the following crowd.