Let’s see. What does Wall Street think you should know? Of course, you will want a company that is currently favorable or “hot” – like JUWEI used to be. Then you need to look at their financial statement that has been audited by a big accounting firm. – like TSLA. You really should check to see if they have any big outstanding financial obligations that have little asterisks next to them in the Annual Report – like under funded pension plans.
Of course you will want to get their financial statement to check their P/E ratio. That’s Price/ Earnings or how many years of earnings it will take to make back the price of the stock today. The lower that number the better. For many years the average has been about 14. If it is above 20 or 30, well ??? We won’t factor in the rate of inflation that will dilute the buying power year after year. And there are lots of other numbers like this Wall Street says you should be studying.
Brokers want to send you reports, graphs, company updates, interim reports and I don’t know what all, but stop and ask yourself, “If I can get this so can everybody else so what good is it?” Now you’ve got it. None. All that information will not tell you that after you buy it it will go up – and that’s all you want to know.
We used to have a guy where I was a broker who wrote reports. He was told to do a report with charts and graphs. He said, “OK, do you want it to be bullish or bearish?” He could slant it any way we told him using the same facts and statistics and never tell a lie. The small investor is at the mercy of these people.
One of the greatest sources of information is Morningstar. They have every bit of information that is available about a company and they will sell it to you at a reasonable price. My problem with all this information is there is one important thing they cannot tell you – if I buy it, will it go up?
After more than 30 years in the business I will tell you that all the information you can gather about any company or mutual fund is totally and completely worthless. Trying to pick a winning stock is very difficult so what I do is let a very smart guy do it for me and he does it at no charge. How? Simple. I hire the manager of a no-load mutual fund that is currently going up and I buy that. As long as his fund is advancing in price I will keep it and as soon as it starts down I sell it and find a new smart fund manager who can make money for me.
There is no such thing as a “good” mutual fund. At times they are good and at times they are bad. Good is going up. Bad is going down. If a fund has been advancing for more than 60 or 90 days at the rate of more than 2% per month it will show up on my Buy list. I don’t need to know anything else about it and no further research is necessary.
Show this to your investment club members. A chart is helpful, but the numbers will speak for themselves. The only research your club needs to do is find a no-load mutual fund that is advancing the most in the last 90 days. Forget about 3-year and 5-year performance. What has it done lately? Your club can be a winner every year.
Basically there are two things you want to know. 1. Is it going up? 2. If it goes down where do I sell it to protect my capital? That’s all the information you need.