Hey guys, lately i've been doing a lot of trading in my own account with TD ameritrades thinkorswim. I usually use Yahoo finance for news but i've had problems with most of the articles not having helpful information in actually making a trading decision and I want to be more efficient and find important information and not articles on how to dress up for a wall street interview. So really what I am asking here is. How do you do your research and how do you sift through the bullshit to choose your stocks.
I am trying to kind of refine my approach to investing so I am trying to start from the beginning on how I actually research my stock. Do you often call up peers to get information and opinions on a stock? or do you pay for information as well.
Thanks In advance.
Kyle
Majority of the time, whatever "BREAKING NEWS" info you find doesn't even matter because it'll be priced in. You either have to look far far in advance, use technicals, or play earnings
The super long term investments are pretty simple. Find out what companies are severely beat down and hold them for the long haul. Don't dump them no matter what price fluctuations occur. I like F and BAC
Technicals are more tricky. That candlestick and super intricate indicators are pretty much garbage. Stick to the main support/resistance, regression channels, MACD type stuff
Earnings are a huge gamble. Even if the company makes/beats estimates, their guidance can make the price plummet.
It takes years to learn, you never really "figure it out".
Try to understand the business-products, customers, growth, etc Understand the industry-competition, market size, growth, competitive advantage, barriers to entry, seasonality, rate of success, etc Financials-read the 10k and anything else that's relevant Also look at management, who owns the stock, recent news, potential risks, stuff like that
Interested to see other peoples methods. Keep it coming. Very helpful Thanks
James Altucher wrote a book called "How to Trade like a Hedge Fund". It outlines 20 strategies, and I think there is something in there for everyone. It all depends on your time frame and your ability to choose your battles to win and loose.
If you are looking for a free source to help you better understand a business model, read some articles from SeekingAlpha and let others lay out the case - both good and bad.
I've started trading extremely actively recently, now that my dad has handed me his brokerage account.
SeekingAlpha is good for research, but don't blindly buy/sell after skimming through the articles. After you read through a thesis thoroughly, google the ticker and the company and understand what the company is going through right now. Go to twitter and search $(ticker) to get an idea of what people are thinking. It's not always extremely reliable but it's good to know what other people are thinking about/what type of questions they are asking about the company.
Other ways to get stock ideas is follow what other hedge fund managers are doing. You should look for managers that not only have a good track record, but are open about why they are buying into a company and write down some main catalysts. You should have your own personal filters too. For example, for me, I would never buy a stock trading near it's 52-week high no matter how much people tell me it's bound to grow/is undervalued. There are some exceptions. Maybe they're right, and it rallies and doubles, but at least I am comfortable with the trade. I don't like the downside. I always use Google/Yahoo etc. to compare some metrics with other industry players (e.g. p/e, p/sales, etc.) and identify some features that are specific to the company. For example, I feel like RIG is extremely undervalued right now, because of all the legal lawsuits, as compared to SDRL etc. So right now I would go short something like SDRL/DO and buy RIG to make a pair trade. Just an example, haven't analyzed this that much yet.
Einhorn is one of the managers I follow and I really like. He's not shy to admit mistakes and get out of positions (Example: Dell). STX and MRVL are stocks he's putting money into. Maybe you'd like to take a look at them. You can use marketfolly.com. They are usually quick to update on hedge fund managers' picks. If you use twitter extensively you can also follow several people who'd tweet about huge insider buys/ideas/acquisiton rumors etc.
Most of my returns over the past few weeks have been on speculating earnings. I've returned about 35% net so far, just buying or selling options to speculate on them. I like how the expected result is so discretely defined around earnings releases. If you're interested, get this book called the "BioTech Trader Handbook". He will give you a good primer on using options to structure trades around such catalyst events, even though the focus of the book is the result of clinical trials. The same principles can be applied to earnings releases.
Twitter will also help you to play the rumors, for example I bought some sept $9 calls on OCZ which appreciated around 20% (I got in a little late), and I was screening twitter for the $OCZ. There was speculation that STX would announce an acquisition of OCZ. Some people started saying that all this was a rumor because traders were not buying into OCZ even though the speculated buyover price would be 14$. The price at this point was around 7$. It made sense, and I read some other tweets that gave me a sense of "negativity" from a lot of other traders. I got out of the position and bought puts instead, they were still cheap. Later that day, no news of STX buying OCZ. Right now OCZ is down 10% in after-hours trading. Yes, OCZ is a good acquisition target and someone might buy it later but I don't care about that, I'm going to get out of my position at a good aggregate maybe ~150-200% profit. The point is, trade the rumor, sometimes it's safer.
Again, twitter is not always reliable, but it's good for retail traders who're not on a trading desk where everyone's talking about a stock or the market.
Understand this is a little long, but just thought I'd share a trading process that has worked for me.
Happy Trading.
Great post!
Great post!
www.marketwatch.com
[quote=Imperialian]www.marketwatch.com[/quote] This.
Watch the ShadowTrader show during market hours (available for free on ThinkorSwim). CNBC is a must (on TV or ThinkorSwim), and even Cramer can give decent food for thought sometimes.
Good website for stock screening: http://www.finviz.com/
Disclaimer: I'm an active trader using ThinkorSwim.
You mention CNBC as being a must but what about Bloomberg? Good post by the way.
Bump
Real good post monk, unfortunatelly I cant give SB´s.
For the sake of completeness, could you provide us with a list of good people to follow on twitter ?
This thread makes me cry.
What would you do to research for the shorter term? At a value HF it must be somewhat different I'd assume, perhaps not though. I feel like it's not necessary to read through a company's 10-k's for the short term, but I actually have no idea. I'd love to hear any input you have.
I think understanding a company's business better than other people is actually really important even for short-term trades. We ended up doing this with corn, for example. Spend a week talking to farmers and fertilizer dealers and you get a pretty good idea of what the crop is actually going to look like, while the typical trader or whoever is just gambling on whatever the USDA comes out and says in the morning, with no true idea what the hell is driving those numbers other than a gut feeling and a weather report. I actually prefer this kind of investing in a lot of situations just because you get a quicker result, meaning you know if you won or not, and it's all about winning.
Short answer is yes, I think reading the 10-K would help even on a 2 week trade, and maybe especially on a 2 week trade. The people involved in those usually have a much shittier information base because they do it all the time with so many different companies/industries. We did this with ZNGA as well and it was based solely off of fundamentals but the "trade" is only going to last a total of 3-4 months, yet it's going to be far and away one of our top winners for the year.
Not this underinformed:
Terrible handle, hilarious post. Anyways, to the melvin asking for research ideas - top down investing works best especially for someone is looking for a buy and hold strategy with limited capital. I.e., over-bought dollar and over-sold euro means precious metal prices are suppressed artificially --> research mining companies --> realize they are extremely undervalued relative to gold --> identify strong balance sheets --> receive staggering returns --> get laid for being a beast.
Aside from major miners ($NEM, $ABX, $KGC, $GG), I would recommend looking into junior minors ($IAG, $HL, $SVM, $GPL, $RVM, $RIC)
"Good judgment comes from experience, and experience comes from bad judgment.”
That's my advice.
try to get your hands on morningstar
Responses like BlackHat is the reason why I passively invest
Don't know if this will help, but most of these ideas and suggestions (really, almost all) apply to retail. No institutional investors will take ideas from CNBC, Mad Money, Twitter, SeekingAlpha, or ThinkorSwim.
How much money are you talking about? Solely for your PA, or do you work some place where better research skills can be noticed/used (by a PM or superior)? Any particular verticals you like? What kind of experience have you got? Will you ever be in fund management, or are you solely looking for short-term trades and gains?
Any more color would help.
Website for picking stocks via fundamental data (Originally Posted: 01/28/2011)
Hey,
I'm looking for a free website or software to search for stocks by fundamental metrics like P/E-Ratio, P/Cashflow-Ratio etc. Any suggestions on that?
Thanks
fool.com is a good one
Yahoo finance has a stock screener as well
Zacks:
http://www.zacks.com/stock/screener/stock-screener.php?type=SS
Decently comprehensive screener...even exports a csv file for you
www.barchart.com
Some really solid stuff is coming out of stocktwits.com these days.
Finviz.com also incorporates technicals into screen
i second finviz best free screener ive ever used and still use it every day
Yahoo Finance. We use it for our Investment Club at school.
cnbc actually has a decent screener
http://ycharts.com/
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