Smart Stock Investing Tools I Can’t Live Without
There are several smart stock investing tool that I use personally and highly recommend. Using these tools is very smart. It saves you lots of time because you’re leveraging other people’s efforts. Why should you sit there and do hours of research when other people have already done it?
These smart stock investing tools are cheap (or free!) and you make your money back quickly, several times over. Sounds like a good investment, no? But the trick lies in finding sources of reliable information. There are so many data-providers that choosing one or two of them is pretty difficult. Here are the ones I use.
Investor’s Business Daily. This newspaper is awesome! Without reading it, smart stock investing would be damn-near impossible for me.
They have a rigid, disciplined approach with several rules. It’s important (and profitable) to follow these rules because of the types of companies they recommend investing in. IBD studies only the fastest-growing companies with good-looking chart (or technical) patterns. Many of these companies are young, small, entrepreneurial, and volatile. If you don’t follow the rules–every time–you could lose your shirt.
Here are the rules for smart stock investing according to IBD:
- Only buy stocks when the general market is in an uptrend. 75% of an individual stock’s movement corresponds to the market indexes, like the Dow Jones, Nasdaq, and S&P 500. IBD monitors the daily price and volume action of the indices and tells you whether the market is in a “confirmed rally” (time to buy) or a “correction” (not time to buy).
- Invest in the best industries. Different industry-groups tend to move in-sync with one another. For example, financial stocks may get slammed, as technology stocks are booming. IBD breaks the economy down into 197 different industry-groups, and recommends you invest only in the top quartile of industry performers.
- Cut losses early and let the winners run. This is the most important of rules, and one of the hardest to follow. Never allow a loss of more than 8%. Set an automatic stop-loss at 8%. Using IBD’s philosophy, you’re either right or your wrong. If you’re right, you’re making money. If you’re wrong, you’re losing it. Cut all losses at no more than 8% to avoid devastating losses and live to invest another day.
There are a couple other rules, too, but they teach you when you subscribe. The newspaper comes out daily, but I subscribe to the once-weekly, comprehensive Monday Edition. I don’t have time to read it everyday, its an excellent smart stock investing tool.
One thing I don’t like about IBD is that it’s purely growth-style investing. In down markets, there are a lot of values available, and IBD basically ignores them. Other than that, though, IBD makes smart stock investing simple.
Motley Fool. I love the Foolish and entertaining wisdom at the Motley Fool. This service started as a two-man-show when Tom and David Gardner decided to start an investing website in the early 90s. Since then, it’s grown into a big company. These guys know what they’re talking about, and they have a fun, light writing-style.
Their philosophy is different from IBD’s in that they take a very long-term view. They look at both growth and value companies, which I like. They have a ton of free content on their website, which I encourage you to check out at Fool.com. Also, be sure to check out their CAPS rating system, where thousands of individual investors share their knowledge and insight for free.
They have a bunch of newsletters you can sign-up for. I like Stock Advisor and Hidden Gems (I subscribe to both).
SeekingAlpha. This site compiles articles from a variety of stock bloggers and investment professionals. It’s comprehensive and has information on almost every company. The design of the website is easy and intuitive. Plus, it’s all free. They have different email alerts you can sign-up for. I rarely ever invest in anything without checking it out first on SeekingAlpha.com.
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