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The rule of 72

Stock Picks — Sun, 13 Jun 2010 19:33:19 GMT

Do you know the rule of 72? If you dont you should memorize it. Its easy to work with. If you get a 12% return on your money and you want to know how long it will take for your money to double, its simple. Take 72 and divide by 12. The answer is 6 years. If you get 24% on your money, its 72 divided by 24 or 3 years.

CAN SLIM Strategy - 1521% versus S&P500 gain of 55% from 1998 to 2008

Stock Picks — Tue, 22 Dec 2009 21:51:42 GMT

CAN SLIM is a philosophy of screening, purchasing and selling common stock. Developed by William O'Neil, the co-founder of Investor's Business Daily, it is described in his highly recommended book "How to Make Money in Stocks".

C = Current quarterly earnings per share - Earnings must be up at least 18-20%.
A = Annual earnings per share – These figures should show meaningful growth for the last five years.
N = New things - Buy companies with new products, new management, or significant new changes in industry conditions. Most importantly, buy stocks when they start to hit new price highs. Forget cheap stocks; they are that way for a reason.
S = Shares outstanding - This should be a small and reasonable number. CAN SLIM investors are not looking for older companies with a large capitalization.
L = Leaders - Buy market leaders, avoid laggards.
I = Institutional sponsorship - Buy stocks with at least a few institutional sponsors who have better-than-average recent performance records.
M = General market - The market will determine whether you win or lose, so learn how to discern the market's overall current direction, and interpret the general market indexes (price and volume changes) and action of the individual market leaders.

CAN SLIM is great because it provides solid guidelines, keeping subjectivity to a minimum. Best of all, it incorporates tactics from virtually all major investment strategies. Think of it as a combination of value, growth, fundamental, and even a little technical analysis.

Remember, this is only a brief introduction to the CAN SLIM strategy; this overview covers only a fraction of the valuable information in O'Neil's book, "How to Make Money in Stocks". We recommend you read the book to fully understand the underlying concepts of CAN SLIM.

The CAN SLIM Investing System returned a compounded growth rate of 1521.7% versus the S&P 500 gain of 54.92% from 1998 through December 31, 2007, according to the American Association of Individual Investors (AAII). AAII studies over 50 of the top investing strategies, and in the growth category, The CAN SLIM Investing System continues to outperform. The CAN SLIM System is based on the seven performance traits the biggest stock leaders exhibit prior to a big price move.

IBD Markets Writer Kate Stalter states, "CAN SLIM Investing works in all market conditions because it's based on following the lead of the general market. Investors have done very well with The CAN SLIM System, because it draws from historical precedents, not guesswork. The CAN SLIM guidelines are what will help investors spot the emerging growth stocks faster." Stalter also mentions that IBD's Daily Stock Analysis videos are helping investors learn technical and fundamental signals.

IBD conducts CAN SLIM education seminars nationwide to help investors learn how to select stocks and manage their portfolios with proven rules. More information is available at

Investor's Business Daily's Web site

Free Tool - StockScouter - Outperform S&P 500

Stock Picks — Tue, 22 Dec 2009 20:46:17 GMT

The quick and easy way to analyze a stock's potential. StockScouter rates more than 5,000 publicly traded companies on a 10-point scale. StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7. StockScouter compares the fundamental and technical qualities of stocks to measures that have proven statistically predictive of stock performance in the past. StockScouter then assigns an expected six-month return to each stock based on this statistical profile and balances that return against expected volatility. The ratio of expected return to expected volatility, or "risk," yields the stock's final overall rating.

Do StockScouter outperform the market? Yes, about 16% a year compare with S&P 500 (Source: Top 10 portfolio)

Top-Rated Stocks

How Does MSN Money Choose a StockScouter?

5 Bullish Candlestick Pattern Money Makers

Stock Picks — Tue, 22 Dec 2009 20:23:05 GMT

For almost every bearish signal, there tends to be an equal and opposite bullish candlestick pattern. For example, signals suggesting a bearish Dark Cloud Cover would become a bullish Piercing the Line when reversed and inverted within the proper corresponding trend. To make this even more confusing, some bullish and bearish candlestick pattern signals have very similar names.

Sometimes they have identical names - just different contexts. The difference may simply be the position and prior trend within the chart. So, certain candlestick patterns may look the same but actually have very different meanings. The pattern is most reliable when it is properly positioned on the chart.

It's not enough to simply memorize the candlestick patterns. You must be able to place them in context. Here are some of the most reliable bullish candlestick pattern signals and the larger trends within which they appear:

Bullish Abandoned Baby - a rare but very reliable 3 candle pattern reversal in a down trend, the opposite of its bearish namesake. A long black candle is followed by a gap down into a very short or spinning top candle of either color. Another gap (up this time) follows on the 3rd day, forming a long white candle nearly the length of the 1st day.

Morning Doji Star - the opposite of an Evening Doji Star. A long black candle is followed by a gap down in the morning, creating a Doji for day 2. The 3rd day creates a gap up with a white candle, which should be long enough to indicate the breaking of the old trend line (crossing the midpoint of the 1st day).

Three Inside Up - 3 candle reversal pattern. In a downtrend, black then white Harami candles form. The 3rd day opens at the midpoint of the 2nd day and trades up. The 3rd day white candle should be long enough to extend above the 1st day's opening and clearly break the old trend line.

Three Outside Up - 3 candle reversal pattern. In a downtrend, a black then white Engulfing pattern forms. The 3rd day opens at the midpoint of the 2nd day's range and trades up above the previous close. This clearly breaks the prior trend.

Three White Soldiers - a reliable 3 day reversal pattern. In a downtrend, 3 consecutive long white candles form. Each candle opens within the body of the previous day's candle.