Archive for September 16th, 2007
IBD Top 20 Rules
1Consider buying stocks with each of the last three years’ earnings up 25%+, return on equity of 17%+ and recent earnings and sales accelerating.
2Recent quarterly earnings and sales should be up 25% or more.
3Avoid cheap stocks. Buy stocks selling for $15 to $100 or more.
4Learn how to use charts to see sound bases and exact buy points. Confine buys to these points as stocks break out on big volume increases.
5Cut every loss when it’s 8% below your cost. Make no exceptions so you’ll avoid any possible huge, damaging losses. Never average down in price.
6Follow selling rules on when to sell and take profit on the way up. Review “When to Sell and Take a Profit” in “How to Make Money in Stocks.”
7Buy when market indexes are in an uptrend. Reduce investments and raise cash when general market indexes show five days of increased volume distribution.
8Read IBD’s Investor’s Corner and Big Picture columns to learn how to recognize important tops and bottoms in market indexes.
9Buy 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.
10Pick companies with management ownership of stock.
11Buy mostly in the top six broad industry sectors in IBD’s New Highs List.
12Select stocks with increasing institutional sponsorship in recent quarters.
13Current quarterly after-tax profit margins should be improving, near their peak and amongthe best in the stock’s industry.
14Don’t buy because of dividends or P-E ratios. Read a story on the company. Buy the No. 1 company in an industry in earnings and sales growth, ROE, profit margins and product quality.
15Pick companies with a superior new product or service.
16Invest mainly in entrepreneurial New America companies. Pay close attention to those with an IPO in the past eight years.
17Check into companies buying back 5% to 10% of their stock and those with new management (what is management’s background?).
18Don’t try to bottom guess or buy on the way down. Never argue with the market. Forget your pride and ego.
19Find out if the market currently favors big-cap or small-cap stocks.
20Do a post-analysis of all your buys and sells. Post on charts where you bought and sold. Evaluate and develop rules to correct your major mistakes. It’s what you learn after you think you know what you’re doing that’s vital. That’s how to improve your results.
Cyclical Movement in Gold
The cyclicality of gold has very real demand side forces at work. 25 years of data shows that around September gold prices go up, “during which consumption is highest as gift-giving peaks beginning with Indian harvest and wedding festivals in autumn and carrying through US religious holidays and Chinese new year.” This is very important as we go into a Fed meeting with people saying that inflation is going through the roof and higher gold is the proof of this.
Source: Spectrum Commodities
