Monthly Archives: May 2015

Good Investing Resources

For future reference I wanted to make a list of good resources that I use. This list is a work in progress and most likely will change over time.

Finviz (http://www.finviz.com)

Best stock screening tool I’ve found.  Great for screening for all kinds of things.  I’m sure you can find hundreds of screens that are reliable. My favorite screens that I have found to produce reliable winners are as follows (I use other screens as well all of the time):

Screen 1: High Growth (25%+ Rev Growth, Profitable, USA Only) – Ideal candidates for longer term holds; you can also remove the profitable part of it to find fast growers that may be under followed because they aren’t profitable.  I only search for USA listed companies because they tend to trade more reliably and are less risky.
Click here for list as of 5/28/15.

Screen 2: Down 30% Past Year, Above 200 Day Moving Avg (DMA), USA Only – Ideal candidates for turnarounds.  Typically a stock will move before the fundamentals of the underlying business start to improve. By looking for stocks that have risen above a longer term moving average, this screen finds stocks that are both anticipating improving fundamentals and reversing longer term downtrends.
Click here for list as of 5/28/15.

Screen 3: Down 20% in One Month, Profitable, Growing Revenues 10%+, USA Only – Ideal candidates for shorter term trades. These are typically stocks that are steadier stocks that got hit for short term misses on earnings that could bounce back. This one requires a faster trigger finger because if it is a temporary hit the stock most likely won’t stay down for long.
Click here for list as of 5/28/15.

You can obviously open up the list to non-USA listed companies.  I do this from time to time and probably should be more open to foreign listed companies.  I’ve found a few big winners overseas, including Baidu (BIDU) in September 2006, Nokia (NOK) in June 2012, Leju Holdings (LEJU) in 2014.

After going through these screens, I quickly flip through the financials to see how they’re doing. Below is a resource tool I use for looking at the 10 year financials of each company.

As a side note it might be a good indication of froth in the markets if you don’t find too many in Screen 2. I haven’t backtested this to be sure though.

Another useful tool I’ve found with Finviz is you can click on the tabs above the list of stocks in your screen for each of the following:

“Overview” – standard list of stocks in your screen

“Valuation” – shows the p/e, p/b, p/fcf and a variety of other stats for each stock in your screen

“Financial” – shows ROE, Dividend Yield, etc for each stock

“TA” – shows the chart of each stock

There are other tabs as well that you might find useful.

GuruFocus (http://www.gurufocus.com)

You can get access to the 10 year financials for free through Guru Focus. I pay for their screening service but you don’t need to do that. Here is a link to the 10 year financials for IACI, a company I hold as of May 28, 2015:

IACI 10 Year Financials: http://www.gurufocus.com/financials.php?symbol=iaci&Submit=Go

You can switch to the 10 year financials of other stocks by entering the ticker symbol in the box just below the chart at the top right.

Stockcharts (http://www.stockcharts.com)

You can get charts for the past 3 years through Stockcharts for free. If you want to go back further on your charts and be able to scroll back through date ranges in time then you will need to pay for their premium service.

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Accounting is the Language of Business

I figured for my first post I’d write about what you need to do before you start investing.  Before you do anything, you need to get up to speed with the basics of accounting.  It is the language of business and without any knowledge of it, you’ll be fighting an uphill battle when it comes to running a business or investing in businesses.  Like any other language, it takes time to learn it.

You don’t need to major in accounting or become a CPA, but you do need to learn the basics of accounting and how financial statements work.  Take an accounting class or two on the side, whether you go to college or not.  Local community colleges have courses that you can take or you can probably find something online.  I guarantee you that if you get comfortable in the language of business it will pay off later on down the road.

I usually try to ask myself if I’m truly comfortable with whatever it is that I’m invested in.  Some stocks I’m looking to trade shorter term and not taking big positions so this isn’t as crucial. But for my larger positions that I’m looking to hold for a longer time, its important for me to be comfortable with the position so I can sleep at night. If the market were to shut down right now or if trading were halted in a stock that I own before I could sell the stock, would I be comfortable owning it?  I need to know what it is that this business does, whether or not it has a strong balance sheet that can weather any storm, and whether or not operations are improving within it.  To answer these questions, you need to understand how to read statements of cash flow, balance sheets and income statements (ie Financial Statements).  These are the essentials of accounting.

I majored in accounting at Lehigh for three reasons:

(1) I started out in engineering and quickly realized I hated it.

(2) My family wasn’t well off so I needed to find a field that was reliable to work in.  Relying on my parents for financial support wasn’t an option.

(3) I wanted to be in business and knew that understanding accounting was essential to being successful in business.

I can’t really remember when I realized that accounting was the best way to learn the basics of business.  My parents weren’t into business or investing so most likely it came from reading books or articles about Warren Buffett.  It’s been 20 years since I started getting interested in investing in high school, but I still regularly seek out Warren Buffett’s advice on investing. The guy is just a fountain of awesome advice.

I was catching up on some recent articles about him which is how I came up with the title of this post.  He recently advised a teen cancer patient that “Accounting is the language of business and there’s nothing like getting it early and getting it into your system.  Getting comfortable in a foreign language takes a little experience, a little study, early on but it pays off big later on.”

It’s great advice for anyone at any age and you need to start getting that knowledge into your system as soon as you can.