Your Questions About How To Pick Stocks

Mark asks…

How do you pick your stocks?

I start out by finding leading industries, then I find mid cap companies in the industry and compare them to its competitors. Then I compare there fundamentals by looking at margins, like operating margin and net income margin, ROE, leverage ratio, PEG, SG&A % of sales, % difference of revenue YOY for the past two to three quarters and annually. Also I look at analyst estimates to see if growth is slowing”I dont buy off there estimates or believe them, but a book I read said its important for growth companies”. Then after I get 5-10 mid cap or small cap companies with good fundamentals, I use technical analysis by seeing how much they’re valued compared to others by seeing how far away they are from the 200sma. Also I judge there stock chart as a whole, if its choppy I dont like it and if it just had a huge increase or decrease I dont like it either. I try to find the stock thats closest to its 200,50,20, and 10sma because since the rest of the companies are little to way above the 50 and 200sma, they should be close for a breakout/ increase in price as well.
I did this technique for aerospace/defense industry and came up with smith and wesson as my top choice and for now Im up 4%.

I told you my trading system, so tell me yours.
I like your contrary view of the markets and it sounds like your pretty intellectual about it, every book I’ve read said financial news is biased and make you late to the party. I still believe this, but where do you find your information at? I don’t want to look at Bloomberg or other famous financial news websites for new information, because they’re probably biased, wrong, and yes make you late to the party.
Do you work at a highly profitable institution, hedge fund, or have made more the 100,000 dollars from the markets? I simply don’t believe you that my evaluations of a company are useless because all the books Ive read have leaded me up to my system.

John answers:

Im up 18% and I just follow my gut.

All that crap you are spewing is pointless. Business is not about that. Trading successfully is about watching growing trends, public opinion, emerging technologies and and a bit of genius.

You have your nose so close to the page you cant see the whole paragraph so to speak. Microing it way too much.

For example you watch scientific publishing for newly developed technology (Ill use one I really did) and you find out that for the first time company x has developed a way to print solar panels at an efficiency 2-3x any others out there at the moment. You know this will be big because everyone is all about that green crap (growing trend) and you can brag about it (public opinion). You make sure there is nothing coming out in the next couple years and the company has not made any press releases about retarded decisions. Then comes the genius. What does your gut tell you? Ask Warren Buffet how important your gut feeling is.

That is a recipe for success. No matter what all that jargon you said up top leads you to believe. That is why I made so much money. No one thought the company was valuable I was able to scoop all of it up cheap before anyone realized its worth cash.

Mary asks…

Is there a site where I can search for stocks by share price?

I want to start investing in stocks but don’t have much risk capital. I want to be able to look through stocks with a share price of about $5 – $7 and research those before I begin investing in the stock market.

Is there a site where I can search for stocks by share price?

John answers:

Yes, Yahoo finance allows you to do so. Here is a link to where to get started. Pick the Yahoo stock screener, not the HTML one.


Richard asks…

what is the best way to do online stock trading for a first time starter who has no knowledge of trading?

I am completely new starter thinking to do online trading of stocks. But due to so many misleading informations and I am just confused which one to rely on. I think this place is where people share their own experiences.

John answers:

The first thing you must do before you begin to invest in stocks is to define your long term and short term goals. You will need to determine why do you want to invest in stocks and not put your money into other investmnet vehicles.

Once you have determined these factors, you must determine how much time and effort you will have to devote to your investing. There are different strategies and styles that suit different people. What works for one perston may not suit another. Some of the information you will run across on the Internet will be good and some of it will be worthless. It is up to you to develop your own investment style and objectives. Then go out and find stocks that fit your defined creiteria.

Just starting out you should read all of the information that you can about investing in stocks. There are web sites to teach the beginner how to invest in stocks. Yow will need to learn how to pick your own stocks and not rely on the advice of others. If you rely on another person’s advice you will surely lose money in the long run.

So the bottom line is to become as knowledeable as possible about stock investing. Define your investment goals and develop a plan. Then just stick to your plan.

David asks…

How can I look up stocks in the newspaper online?

How do I find stocks in the newspaper online? (like the school project you got when you were a kid) I’d like to see the progress of a few stocks but I don’t get the paper.

John answers:

You can follow a particular stock, at the following link. Just enter the symbol, then click [Get Quote].


This is from – this is a free site that lets you create a portfolio of stocks with $100,000 in “play” money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas. There is also a charting feature , so you can see how your portfolio performs compared to the S&P 500.

Here are this month’s best traders:

Good luck.

Sandra asks…

What are three stocks that I could invest in?

I have to pick 3 stocks to invest in for my Business Finance class.
I don’t really pay that much attention to the stock market, so I have no idea what to pick .. ??

Everyone in my class has to pick 3 stocks to invest in and whoever’s goes up the most by the end of the semester (May) gets 10 points added to a test grade.

What would you pick ??

John answers:

I have been asked this question repeatedly for the last 6 months or so.

In every post, my answer has been effectively this:

Cash, US Treasuries and CD’s.
75% or more of the class will prob be wrong. Better to end up with the same money you started with and have most people lose and thus, you win by stilling retaining your principle.

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