I wrote about my Stock picking strategy before, you can read it here.
Here is my updated list:
1. The stock should pay dividends. I added it as a rule. I still have stocks from my "before dividends stocks picks", which I am waiting to sell.
2. I have my list of stocks I like, which I update monthly here
In order to put stocks on my list I look through
- all financial data - Ratios, Income Statement, Balance Sheet. I make sure all their numbers are positive and debts make sense.
- 10K, 10Q (not always) - usually if this is unfamiliar stock and I need more info
- company website, especially if I am unfamiliar with industry or stock. The stock should make sense to me - well known brand, love by many, one of necessities, have future, etc.
- Insider transactions ( I do not like when insiders are selling)
- Historical prices and years of dividends
- Current articles and reviews (just to see what's going on)
I watch my list on yahoo finance. I created my customized view, which helps me track my stocks.
It includes
Stock name / stock price / change&%change / 52-wk high/ 52-wk low / Yield / EPS/ PE/ Div Pay date/ Ex Div Date/ 1-yr Trgt price
I like how I can sort by different criteria and I can easily see how each stock is doing.
3. I move stocks to my "Maybe to buy list" if
- stock is already on my watch list (it means I already research stock)
- it is trading close to 52 week low
- 1 Year Target Price is higher then stock trading price
4. I sell stock if it earned >35%, not including dividends, stock is trading at the same price with some ups and downs for 2-3 months and if the current price of stock exceeds 1 year Target price.
I mostly use my IRA accounts for these kinds of transactions.
Some of you asked me why I sell my winners. I have limited capital and by rotating stocks - repeatedly selling winners/buying losers I can increase my capital faster.
5. New stocks.
- I review % Losers and Most Active on Yahoo Finance daily. I check if any stocks can be added to my list.
- I analyze other bloggers stocks picks
- I read Financial part of local newspaper.
What about you? How do you pick your stocks?
Hey,
ReplyDeleteI am not wondering why you sell the winners, but how long for that 35% mark. Like 35% in one year, 2 years? Obviously in time you would hope that all stocks cross that threshold.
On a completely unrelated note, I nominated you for the Liebster Award, you can do whatever you wish with the nomination, my feelings will not be hurt if you decide it isn't your cup of tea.
DeleteKipp
hello Kipp, answering your question about selling winners... I do not sell all stocks which reach 35%, sometimes I hold them longer but if the stock is staying at the same price like for 2-3 months with some ups and downs, then I start thinking to sell it. Plus if current price exceed 1 year target price I start watching stock more careful.
DeleteThanks for nominating me for Liebster Award. I looked it up online and it looks like if I accept it I have to follow some set of rules. Please let me know how it it works.
From what I found it seems that basically if you accept you acknowledge who gave you the award in the post, answer the 5 questions and nominate 5 new bloggers (couldn't find a clear definition of "new") and ask them your choice of 5 questions.
Delete