Hi Derrick: I don't know any of the stocks you mentioned. It takes some effort to get a good feel for any one single stock so without offering any specific comments any of your stocks this is what I would do (that comes to mind):
* Check out the threads on SI, Stockhouse and Raging Bull to get a feel from the people posting. Sometimes you'll find some useful DD links there. However, don't rely on anything that's posted unless it can be independently verified.
* Is the stock a leader in its field? Is that field of interest to the market? It's one thing to be top dog in a sector - but if the market isn't interested then may be best to pass. Why wait in biotech for 10 years before the market finds you again?
* For Canadian stocks check their filings on SEDAR. If they don't post their AUDITED financials - then stay away.
* If newsletter writers are pushing the stock - have they been paid a fee either in cash or shares - if so, ignore their comments or take with a grain of salt, but you may find some useful info that you can follow up and check for yourself.
* If volume is thin you may not be able to sell when you want - you may have to wait for strength and a volume surge - which may not even last a week before it dies away.
* Avoid stocks that have a history of name changes and reverse splits, or that were recently mining stocks that have just discovered the Internet or B2B or biotech, etc.
* Use a number of Internet search engines to do wide ranging searches for info.
* Follow the trade press for comments or stories.
* Talk to the PR people - but just use that as another source of information.
* Find out if there are any legal proceedings pending against the company - or if they have a history of litigation behind them.
* Look at a 5 year chart (or longest possible) to get a feel for how the stock has been trading and examine the reasons behind the trends in price and volume movements.
* Take the size of the share float into consideration - a must! If it's huge then it's very unlikely to up uphill fast or have a sustained uphill trend - but can easily go downhill.
* Don't feel compelled to jump right into a stock without first having a gut feel that it is where you want to be. There is always another train pulling into the station. If the stock shows strong potential then it'll offer many entry points, e.g., occasional dips. Don't throw everything into a stock at once - I find it's better to stagger your entries and exits over time - which may be days or weeks.
* If you can visit the company then do so - I visited Napier last year. Check out what's going on - who is there - do they seem busy - talk to some people - and if you can talk to their customers and spin some story about how you may also be considering using what they just purchased from company XYZ and what they think of it blah, blah...
* See who are the major shareholders - the filings on SEDAR will help you there. How many shares do the company officials hold? Have they been selling/buying/holding? Is there any corporate interest?
* Get the prospectuses from some leading mutual fund companies and see where their managers are putting the $$. However, 80% or so of funds don't do any better than the market averages, but it's interesting to see where they are putting their resources.
* Develop a gut feel for the fundamentals - based on all that you have found out - do you think the company has a strong future and will it offer you a good chance of making a profit?
* Be diversified and don't put all of your eggs in one basket.
* For small/micro caps and fast moving stocks use a limit order.
* Keep some of your portfolio in cash vehicles - so that you can then buy on dips without having to liquidate other positions.
* I subscribe to TheStreet.com - lots of good info there - I also like the Fool web site, CNBC, Bloomberg, SmartMoney, Canadian Business, National Post,...
* Educate yourself as much as you can.
* Don't expect every stock pick to be a winner. Learn from your mistakes - we all make them - don't dwell on past "error's of judgement" and move forward - but don't keep repeating the same dumb stuff some people seem to do over and over.
* I don't watch my stocks every day - it would just drive me nuts over time. You can always set up price alerts or stop losses if you like. I'm much happier just investing using potential strength/fundamentals criteria and then just let the market do the rest. I do reevaluate each position every quarter to see how they are doing.
* I guess we all have our favourite SI posters. I've bookmarked some of them and I like to see what they are saying and where they are putting their $$ (if you can believe them) - but more out of interest than anything. Here as with everywhere - independent verification is a must.
That's enough for now - I'm not perfect by any means - but these are many of the things I consider before taking/selling a position in a stock.
Good luck,
David :) |
