OG_LOU responded so something I said about investing.
I thought that would be a good topic to chill on.


Lou, I am unfamiliar with those tools, but I will look at them.

I am not an individual investment advisor. I consult to companies: family to gigantic, strategic consulting, technical assessments of new ventures, project management involving lots of technology, market analysis and product development, including Wall Street firms.

But I love reading and discussing all kinds of investments, not just what I do or have done for myself. I am actively trying to catch up on some of the latest online tools that I might have missed because they were offered by some broker I was not using.

Maybe the lesson there is to use multiple brokers today, in order to be kept aware of different tools and opinions.

Retread, thanks for the reply and the information about wour pprofessional skills
The link to http://www.betterinvesting.org/public/default.htm is one program that encourages looking for companies that have a track record of good earnings and that develop enough new products or have popular products that would be difficult for start-up companies to make and drain away their business. Morning Star financial publications calls the good products that other companies would have a difficult time replicating and taking away business as �Wide Moats.� The Better Investing program tries to get club members to look at companies from a vantage point of how do all the boring numbers stack up and not what might become a popular product but has little earnings. Cabella�s the sporting goods store is an interesting company but their bottom line earnings are lower than other similar companies.

Some libraries have the "Better Investing" Magazine on their racks. I think it cost $29/yr (mag only) or $79/yr with the data service.

Evaluating companies can be done by hand with a lot of research, reading and hand data entry or with the aid of software (see website for prices) http://www.iclub.com/products/default.asp and a data subscription service ($79/YR).

I use the �Stock Selection Guide (SSG) program in the Tool Kit 6 package. There is a 30 free trial offer on the ICLUB website if you want to play with the software packages they sell. I bought some of my software used from eBay but it is rarely solld so I had to keep looking till someone was selling their programs.

I tried American Association of Individual Investors (AAII) http://www.aaii.com/ for a year at the same time I was using the SSG/ToolKit software but never connected with anyone locally so we could help each other out. There is some value being in a group, both educational and motivational.

Also trying to use both programs and websites to ICLUB Better Investing and AAII was a bit time consuming, so I stuck with Better Investing and the corresponding ICLUB software. �Club Accounting 3� (CA3) is another ICLUB software package I use for club purposes.

Lou

I will go look at those resources you are using and get back to you.

Do you invest in one sector, or use software with a set of parameters to comb 10,000 stocks and come up with a hot list for you to watch?

Do you track Cabela's, Sportsman's Warehouse, [censored]'s Sports, Gander Mountain, etc? How about other retail that are larger and more direct competition, like Belk, Dillards, Kohl, Ross, Federated, etc?

blech, I thought this was a thread about bad weather, but it's booooring

The weather is boring... more predictable.

No, sector only investing is a no-no rule from Better Investing (BI) everything I have read or from everyone I talk to in the investment field. A couple of local people had most of their retirement $$ in a few stocks and those companies were cooking the books. The companies stock went to zero and now these people have almost nothing in their retirement account.


There a set of suggestions in the BI program but no set numbers because sectors and company size influences what range a set of numbers will actually be. Wall Mart will have a different set of numbers because of its size if compared to Target.


We look at a few numbers from some of those companies if someone in the club brings it up at a meeting. If someone does a SSG with all of the numbers, a couple of the members will comment on some of the percentages and why the company is a good consideration or why some other company might be a better stock.


Lists are generated from readings, the BI magazine has lists that pass as potential selections to buy or sell and they do more research and number crunching than the average BI member.

The BI magazine tracks other clubs interests and puts SSGs in the magazine and on line for the people that pay the membership fee. Some BI.com information is free all the time or free for 30 days.


We look at those companies but try to have a balanced portfolio, no more than 15% to 20% in one sector. I said try. Sometimes we over buy/sell in one sector. I am guilty of that in my own investments. Sometimes one stock goes way up and then my sector balance is heavy in that area. Other times a company gets in trouble/cooks the books and by the time I do something, the stock is down so much it feels like I am screwed anyway if I sell now and maybe the company can stage a comeback.

The women in the group like retailers. When they go up everything is fine. Some retailers depend on trends of what people buy. Shoes seem to be the fastest thing to go up and a short while later another shoe is trendy and our holdings drop like a discarded shoe, but the women still like the physical shoe/purse, and want to hang on to the stock. Sometimes we buy near the top of the up trend and wait a little too long to sell. We did that with Crocs shoes (CROX) and Coach purse (COH) stocks. We lost money on Crocs and made some money on Coach.

What has worked well long term is (SYK) Stryker, the medical device company. Consistent growth in sales, new products and old reliable products where the demand increases each year, the company controls their costs well and has a decent research and development budget and department. They buy other companies that have related products, so that helps in their growth dept.

Star Bucks (SBUX) used to be a good holding but their business model is easy to duplicate on a local level. We sold it when the price dropped significantly but still made money. We had Harley Davidson (HOG)for a while and made some money but saw their sales eroding, their expenses going up, saw dealers were over stocked and the company was trying to compete in some bare-bones profit markets, so we sold HOG

My biggest fault so far is to hang on to a stock, hoping the down swing in share price is the typical market�s over reaction and that a stock issue will gradually go up in price.

I have found a lot of people can pick a decent stock but they hang on way too long when the share price drops. Guilty as charged.

I don�t day-trade and sometimes only look at the exchange ticker prices every couple of weeks. If a stock issue crashes I sometimes find out about the crash a week after it happened, and most of the time it feels too late to do anything constructive.

Lou

I see a trend here...

If I can't set a realistic top and bottom band, I figure that I don't know enough to buy, yet. It may be past time to buy, but I don't know enough if I cannot have some reasons in advance why it would go below the bottom threshold, or above my upper expectation. Then I set a stop-loss sell order on what I buy, to get me out. Likewise, I will set a selling price, and this I may adjust, but only a small bit. Better to get called out early with less than maximum profits than to miss the top and then try to guess when to jump off the roller coaster on the way down.

The stop loss order makes sense. I want the club to implement a "Stop Loss" on the tech stocks we have but no one else agrees with me.

The BI premise is that if a company is good and well managed, even a big dip in share price should recover. Having a stop loss, especially if set to low a percentage (5% to 8%), whip saw takes place and the investor is in and out (too many trades) too often, with commissions eating up most gains.

Investor�s Business Daily (IBD) advises share holders to have "stop loss" orders on all shares owned. IBD basically said a 50% loss of a $10 stock requires a now $5 stock to have a 100% gain just to break even. I sort of agree with IBD. I don�t remember the percentages IBD advises, but it was somewhere around 8% to 12% for most stocks and lower for stocks with large capitalizations.

Re a realistic top and bottom band BI also suggest that but doesn�t push the concept, at least not in the people I interact with. They mostly go along if the company/stock was good in the past, it is most likely some in-favor, out of favor thing more with the investors than something wrong with the company business and stock shares, so ride it out.

I personally look at websites like MSN money, Yahoo finance, and Scottrade and played with different charts with bands, but I didn�t really learn how to use many of the options.

Part of the SSG could be used to set high and low limits but no one I know is talking about that concept a great deal and selling is more a �flying-by-the-seat-of-the-pants� method than anything statistically based. BI is primarily fundamentals based. I bring �S&P vs. a stock� charts to our meetings but that is a simple comparison and if I get too involved/technical I lose almost everyone else and sometimes I doubt my own expertise in this area so mostly stick to what I now to be real.

Because you advise companies, do you have any firsthand information on some good products that are likely to be money-makers? I don�t want you to violate any of your business contracts.

One of the problems most little investors have is jumping on seemingly good products that catch on but not with enough people or products almost any small company can manufacture and the clone products come on to the market within 6 months at a much reduced retail price. Can I say Crocs.

The original type Crocks sold for $30 to $40. Clones were $7 or less in a few years. Of course what counts is the profit mgf. earns when it sells to its distribution chain. $30 / $40 leaves a larger profit margin potential than selling at $7.

Lou

You can't use an arbitrary 8% to 12% pullback as the trigger for the stop-loss on some stocks, like explosive ones with super long-term fundamentals, but a lot of volatility because they are new, thinly traded, etc. For example, if you know a large fund holds a large block of a small stock, and that fund has trigger to sell of at 8% down, they are going to drive the market down 15 or 20%, and wash you out. Then the stock is held tighter by new owners and it climbs back up. The only way you will come out ahead is if you time the bottom and buy it low enough to cover your loss and your first two of your three commissions... better to stay in and ride it back up, or to have not gotten it when it was that volatile.

I used to do a lot of R&D of telecom and medical products, and would have to sign all these agreements to not trade in a gazillion stocks, many unnamed but covered with CYA clauses like, "anyone doing business with ____". For the last 4 years, I have had one huge client, European and privately held, and a few small companies here, with just one or two new products under development, and not public stock.

I like medical devices, because I have worked on launching a variety of them, and understand them. I like to invest in businesses I understand, and companies I know are first preference. The big question mark is the $20 billion annual tax on medical devices in the so-called "Affordable Health Care Act". In the short term, the costs will be passed on to the consumers (us patients), so the companies will just mark it up. In the not-so-long term, the government is going to ration care and deny diagnostic tests. We already see these studies saying that women don't need mammograms, and men don't need PSA tests, before age 50. A PSA test kit costs $8.00. The whole test is less than $40.00 at a specialist's office. Go look at how many men end up with prostate cancer in their 40s, and their late 30s. Same for women with breast cancer.

I have just had my head down so much working on my two projects that I have not looked at anything else. Friends of mine who live off their investments are extracting everything out right now. But they aren't putting it in the banks, who pay nothing for CDs. And the banks aren't lending to businesses.

I'm going to reread this tomorrow after a good night's sleep.

Well, they are putting it somewhere, and where might that be?

I would like to hear your strategy for determining hi sell signals and stop loss signals. I know different stock issues require different numbers or percentages. Web links would be great, it saves typing.


OK, stocks equal risk and from what I read some stocks are a hedge against inflation because as inflation goes up, so do most stock prices.

Diversification is what I frequently read is what the prudent investor needs to do. I have cash equivalent to live on for XX months, a few municipal bonds and utilities or high dividend shares of stock for income and a few capital appreciation stocks with good products that have universal demand.

Gold? I don�t follow it so don�t invest in it. It seems over priced if one looks at the long term prices over the last 50 to 100 years. I have some platinum-palladium shares (diversification ).

I have been reading about several other rare metals used in electronics and batteries. Supposedly, some of these rare metals are in short supply or will be in short supply but I haven�t invested any $$$ because the related companies are mostly new. New companies are full of risks but a few do make it big. I play on the tried and true side so miss out on the big wins but I also avoid the risky losers.

Lou

Where investors putting their cash as they sell out of stocks?
Most of them are keeping cash.

$14.5 Trillion left the stock markets before the 2008 election.
Some of it went back in and made profits on the rebound.
Most is still in cash, gold, or something else.

Pension plans and 401-plans are not pumping money into the markets every week, like they were from 2001-2007. Half of the Fortune 500 companies dropped their employer contributions in 2009. More are doing it this year.

As for how to determine the stop loss price, it varies according to the stock. If you were holding CROX way at the top, I would say sell on a 5% pullback. If you bought it at the very bottom, and were riding it up in 2009, you would not have as much in it. A 5% trigger would have bailed you out when it plateaued for a while, before gaining another 150% on your small price. So the 8% to 13% rule would have kept you in.

You have to look at a lot of things: the fundamental business model, management, sales growth, gross profit margins.

Crocs are were a fad, cute but way overpriced. I don't think they are a $30 shoe. Maybe a $10.00 shoe. Can they make money at $10.00? Can their patent and other lawsuits beat down the shameless clones of lesser quality? Can they expand their product line, and become a brand that can compete with direct competitors that have broad product lines and products that are not copies, like Sketchers?

Would you rather own a company with a 25% gross margin on something people think is cute, or a 70% margin on something people need, like a patented medical device?

Give me the 70% margin on something people need, like a patented medical device.

Lou

Me, too, give me 70% margin and 17% sales growth for the longer run. Tell me what you think of AMMD.

But there is nothing wrong with making a play on Crocs bouncing back. I wish I had been paying attention and bought it at the bottom for a 500% return. That's like an naked option play but actually owning the stock. It's a gamble. There were so many of those in 2009; just think of some of the bank stocks, down from 60 to 2 or 3.

This would be so much easier if the politicians weren't making so many destructive choices. Oh, well, chaos creates opportunities, as long as they don't kill us first.

EU breaking up
http://blogs.telegraph.co.uk/financ...m-brings-british-withdrawal-ever-closer/

Investigating AMMD, I found a link to http://blog.ycharts.com/ and some more interesting information.

I have customer work to do today so I will have to look at AMMD at a later time but the profit margins impressed me. I haven't look at AMMD's expenses. I did notice the current price in near the 52 week high. I was surprised the EPS was so low compared to the gross profit margin, which means the company has a lot of expenses.
http://finance.yahoo.com/q?s=ammd

Euro Latest (17 May 2010): EUR 1 = USD 1.2349 -0.0143 (-1.1%)
http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html

Lou

OG, the low earnings are a question I have, too. Their cash is about 1/10 of their annual sales. But I am not familiar with their financials. I know what they do from other medical projects, and they just popped up on a screening I ran because of their pretty good PEG ratio. Like you, I think they are back near their high, and I don't feel like paying more than the low end of the long-term trend, which is 18 by technical analysis. It is now over 22.

The PEG ration for ANND according to Yahoo is 1.47. I thought that was a bit high. . Yahoo has the industry PEG at 1.28. OTH PFE has a 2.88 PEG.

Online definitions say 1.0 is considered �fair priced� and anything below a 1.0 was heading toward being a bargain. http://en.wikipedia.org/wiki/PEG_ratio


I did an SSG evaluation chart on AMMD and liked the sales chart.
The earnings increases were good but better in the past. The share prices (52 W hi/lows) have been going sideways since 2004 and at almost their high for the past 52 weeks.
I did a max Hi price forecasted share price based on a hi PE 27.6 and hi earnings of 1.41 and came up with a hi stock price of 38.90.
Next I did a minimum low forecasted share price based on some low PE of 12.1 and low earnings of .90 and came up with a low stock price of 10.90

For my PE estimates, I eliminated the hi and low year PE�s 2005-2006-2007. My software can go back 10 years but defaults to five years worth of PEs. The instructions in the manual suggest eliminating any outliers and any years not likely to happen again, that is why I eliminated the 2005 to 2007 PE. A hi PE of 71.2 and a low PE of 45.2 is nose bleed territory for me. Some stocks become chased after because the marked is overly optimistic and has lots of cash. The cash might be there but I think the optimism is gone, so I don�t the PEs will ever get that high for this stock again.


Some SSG information in PDF
http://stockherd.com/mic/files/ssg/scrx_2007-08-21.pdf
http://www.crmic.org/syk.pdf

http://en.wikibooks.org/wiki/Understanding_the_NAIC_Stock_Selection_Guide
http://biwiki.editme.com/SSR
http://biwiki.editme.com/files/SSR/ssg-report%20pages%203%20&%204.1.1.pdf

XLS spreadsheet
http://www.edocfind.com/download/xl...xzL2FyY2hpdmUvdHNzdzguMy9UU1NXOC4zLnhscw
http://www.edocfind.com/en/xls/Stock%20Selection%20Guide%20SSG%20Excel%20template-1.html

On-Line free SSG tool/demo/limited symbols
http://tools.betterinvesting.org/stockanalysis/stockselector.aspx use TEVA as the stock symbol

NASDAQ Welcomes the BetterInvesting 100 Index, symbol BIXX
http://finance.yahoo.com/q/cp?s=%5EBIXX+Components


I have about 100 completed SSGs in PDF format I could send you if I had a way to do it.

Lou

Thanks, OG. I am going to read all your links.
I set up an anonymous email for sharing a few things with some MB posters, but have never received anything. I need to check it more often, and get you to test sending a few PDF at a time to see if it works okay.

Some forums have private messaging, something like private e-mail. I don't know what MB offers. I have a hot mail account set up just like my screen name, including the underline between OG and Lou. I check it, but not often, so say something if you send me anything.

Lou

For this forum, I set up
mbretread@yahoo.com