May 2014 Newsletter
InvestEd 2014: Learn to Analyze Companies
May Webinar: Basic Investing
Utilize Relative Strength to Manage Portfolios: A Buy High, Sell Low Strategy Part 3
Web of Trust
Irvine, CA June 6-8, 2014
John Tonsager will be presenting a new session this year that will introduce you to Stock Rover
. "I don't know about you, but whenever I wanted to learn more about a company as an investment candidate, I would go to a variety of websites: Google Finance, Morningstar, Value Line, Finviz, and others. That changed last year when I discovered Stock Rover, a new site created by some investors who became tired of doing the same thing I was doing in their stock studies." These investors did not want to go to several sources to get answers to basic questions about the quality of a company, so they decided to create a website specifically for individual investors who wanted to evaluate a stock using a wide variety of features all on the same website. From that concept, the Stock Rover website was born.
At InvestEd 2014, we are offering a session on Stock Rover basics, as well as using Stock Rover as a stock screening tool. You'll quickly learn that having Stock Rover as a tool for gathering financial information will help in building and maintaining a portfolio. The Stock Rover website will be one you want to add to your list of resources for analyzing stocks you own and for screening for new stocks.
Several other conference sessions will deal with analyzing companies and using websites to assist you in that process. Bob Adams will discuss his method of studying a company in his presentation How I Analyze a Company. Included in his presentation will be an emphasis on confirming your judgment using Internet resources you can add to your Toolkit software. In a new session this year, Doug Gerlach will focus on Uncovering Small-Cap Stock Gems as a way to boost potential returns in your portfolio. Learn about characteristics of these small-caps that will make them appropriate stock study candidates, and explore strategies for finding the best small and mid-sized companies.
Don Cassidy will give stock selection guidance in his new session How to Decide Which Stocks to Study. Engaging in a "big picture" analysis first will help you narrow your focus related to which considerations are important when looking for stock study candidates. Brad Taylor, in his session Pay Me Now, Pay Me Later, looks at the role dividends play in your stock selection. Learn about the different types of equities that pay a dividend, as well as how to determine if the dividend is safe. Saul Seinberg also focuses on dividend-paying stocks in his updated session A Pragmatic Approach to Dividend Investing. Discover good basic criteria for determining whether a dividend-paying stock would make a good investment choice, and learn about tax issues related to this type of stock. Also presented will be some viable income alternatives to dividends.
The new Stock Rover session and the other sessions dealing with stock study benefit both experienced investors and those new to investing. These, along with learning about potential stock study candidates by hearing corporate representatives at meal gatherings and enjoying the wide variety of other conference sessions focused on technical indicators, the economy, other interesting investing topics, and general technology issues, offer all investors a tremendous educational opportunity next month, June 6-8, in Irvine, California, at the annual InvestEd conference. Register now!
InvestEd Inc. Free Webinar
Sunday, May 18, 2014
8:00 PM-9:00 PM ET / 5:00 PM-6:00 PM PT
Instructor: Jerry Addleman
This webinar is designed for beginning investors and includes subjects new investors need to know about the basics of investing. Among the topics covered will be fundamental analysis, definitions of investing terms, and the rule of 72. Four basic guidelines will be discussed, and attendees will be provided with information about beginning an investment program. Helpful websites will be identified. Webinar attendees will have an opportunity to submit questions and receive answers.
to attend the InvestEd Inc. free online investor education webinar. Space is limited.
Jerry is an InvestEd Inc. director, provides audiovisual support for the conference, and is a member of the webinar team. An instructor at local, regional, and national events, Jerry is vice president of the Space Coast (Florida) Chapter of BetterInvesting and treasurer for the chapter's model club. He is a member of and the assistant treasurer for an online investment club.
Utilize Relative Strength to Manage Portfolios: A Buy High, Sell Low Strategy Part 3
This is the final section of a three-part article. Part 1
and Part 2
dealt with introductory information about relative strength and about analyzing market capitalization, international versus domestic stocks, developed and emerging markets, and growth and value categories with relative strength. Part three deals with looking at individual stocks versus a benchmark appropriate to the individual stock.
Individual Stock vs. a Benchmark
You can compare a stock to a benchmark, such as the S&P 500 Index or its sector, to see if a stock's price performance is underperforming or outperforming the selected benchmark. The chart to the right examines the relative price strength for Lowe's (LOW) compared to the S&P 500 Index ($SPX).
Check out the StockCharts' display
for a full-sized image of the chart you see above. Lowe's (LOW) shows increasingly strong price outperformance compared to the price performance of the S&P 500 Index ($SPX) for the three year time period shown.
On the image to the left, you will see Home Depot compared to the S&P 500 Index. You can view a full-sized image of this chart at StockCharts. You will note that after a period of weakening price outperformance compared to the S&P 500 Index ($SPX), Home Depot (HD) began to underperform the benchmark.
Another example of the price performance relationship of an individual stock compared to the S&P Index is in the image to the right. Take a look at the Coach image, which is displayed full size in StockCharts. You will see that beginning in the spring and summer of 2012 Coach (COH) shows underperformance compared to the price performance of the S&P 500 Index ($SPX).
Relative strength analysis quickly lets you see which of two securities is outperforming the other. You can use relative strength to compare two stocks, as described in this issue of the InvestEd newsletter. You also can use relative strength to compare two indexes, as described in Part 2 of this article series. In fact, you can use relative strength to make relative price strength comparisons over a specific period of time for any two items that have a price: stocks, ETFs, mutual funds, indexes, etc.
Relative strength analysis facilitates strong portfolio performance. Be aware, though, that both items you are comparing could be going down in price. Picking the stronger one does not mean you will make money, as it may be dropping in price but only less so than its running mate! Thus, you need to be aware of the context in which the comparison is being made. One trick to interpreting relative strength charts correctly is to keep in mind that even a stock that is rising in price may have weak relative strength if the market is rising more rapidly. Also, stocks with a declining price may be falling slower than the overall market and show strong relative strength. So, keeping in mind the absolute trend of the overall market is important.
While relative price strength is a worthwhile analytical technique on its own, its value increases when combined with other stock selection criteria and especially valuation techniques. Price momentum measures, such as strong and increasing relative strength, seem to help highlight well-priced stocks that are likely to advance further. However, you need to consider the possibility that many of these stocks may be richly priced when compared to factors such as earnings. Relative strength comparisons are based solely on price. Therefore, you will need to expand your stock studies to address the fundamental factors you usually include.
If you make your own investing decisions with the objective of beating the market, relative strength analysis can help steer you in that direction. You cannot manage what you do not measure. Relative strength measures price performance in the stock market and makes it easier for you to use this information to better manage your portfolio. As you make your investing decisions, seek out techniques that help you the most. Get the garbage out of the portfolio. Never stop checking for laggards. Never stop trying to improve.
Sharon developed InvestEd's online webinar education program. She contributes to two stock study groups within her community and has invested in the stock market for more than 30 years. She holds a BS in Computer Science/Accounting from the University of Central Oklahoma and an MBA from Oklahoma City University. Professionally, Sharon is a retired software developer who designed and developed domestic and European point of sale software solutions for a large car rental company. Her hobbies include drawing and painting, along with enjoying nature, hiking, reading, and gardening. She loves to travel and is interested in learning how history and geography shape people, cultures, and the world.
Web of Trust
When using your browser to search the web, do you wonder if the website link you are about to click will cause you a problem? Web of Trust (WOT) is a small add-on to your browser that will let you know if the site is safe. While not all sites have had enough visitors for WOT to make a decision, many have an indicator for you. Just like traffic signals, WOT uses green for go (the site is safe), red to indicate the site is not safe, and yellow for caution (the site probably is not safe).
Founded in 2006, WOT Services, Ltd. is a Finnish Company that developed the Web of Trust website reputation rating tool. Users see the WOT indications when using most search engines. The small doughnut icon indicates whether a site has a good reputation as a safe site to visit. Website reputation rating programs such as this look for sites that include viruses, spyware, scams, and the like. These sites show a red doughnut beside the link. Sites about which WOT is unsure are safe receive a yellow caution icon, which may be interpreted as unsatisfactory unless you deem otherwise through your own research. You may see a blue question mark, which means the website has not had a high enough volume of visitors submitting a rating for a decision, as is the case of our InvestEd website, which of course, is perfectly safe.
This free safe-surfing tool, which is the world's leading crowd-sourced website reputation service, is available for Chrome, Firefox, Internet Explorer, Yahoo, Bing, and Safari. Even the alternative search engine DuckDuckGo has a partnership with WOT. The ratings come from over 15 million users plus trusted third-party sources. Websites are judged for their trustworthiness, vendor reliability, and privacy. The ratings are continuous. As more and more users make known their evaluations, the icon information updates and remains current.
Yes, you are able to add your own ratings for sites you visit, indicating whether or not you are satisfied or dissatisfied with the site regarding trustworthiness, vendor reliability, privacy, and child safety. Once WOT is downloaded, clicking the WOT icon at the top left of your address bar brings up the rating option. Simply click on the appropriate color for each category.
To see rating details, click on the small italic "i" below the rating bars. Here you will be able to add details to your review. Rating details available include options for you to indicate categories for your evaluation: good site, online tracking, alternative or controversial medicine, opinions-religion-politics, and other. In addition, the user is able to identify whether or not the site is appropriate only for children.
Take a tour of WOT
to determine if you want to join the users of this service. Once you have downloaded WOT, head on over to the InvestEd website
and give it a high trustworthy rating!
Sandy is an InvestEd Inc. director and serves as secretary. She is lead editor and prepares the general program brochure for the InvestEd conference. Sandy, an O'Hara Award recipient, is a former charter member and president of a local investment club. She helps form investment clubs, presents introductory investing programs, and teaches stock study classes at local and regional events. Sandy is professor emeritus, Georgia Southern University.
Questions? Contact InvestEd
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