The Best Stock Idea
by Kip RobbinsNovember 23, 2011 | Comments : 0 Recommended this article: (0)
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It doesn't happen as much as it used to: the stock-talk at cocktail parties, friends looking for investment ideas or your cousin-in-law cornering you at weddings for stock picks because you're "in the market". But occasionally it still comes up. Even though I consider myself an intelligent investor, I always find it odd when people ask others for stock ideas. People seem more willing to trade a stock based on the recommendation of others than to take the time to conduct their own research.
With tens of thousands of publicly-traded companies and extensive stock price and financial statement histories available, it's easy to feel overwhelmed. Some investors might also feel they have no insight, and leave their stock decisions to professional fund managers. Others may just not have the time or tools to develop a winning strategy. I appreciate these concerns and understand that directing your own research can seem daunting.
However, there are a number of investors that are DIYers because they have good ideas and the time to devote to their investments. Others just like to do their own laundry, shine their own shoes and cut their own grass because, quite frankly, they believe nobody does it as well as they can. 'Don't ask others to do something for you that you can do yourself' is a motto I live by too.
Here's a chilling fact that might just jumpstart your DIY approach: most fund managers do not outperform the market over the long run. That's right. Google it and you'll see that study after study has proved it.
It also really doesn't take as much time as you think. Do you have a few hours on the weekend to research a strategy? Perhaps even while you're watching your third football game on Sunday? I bet you also have some good insight into what makes a good stock and what doesn't.
Adding it all up, there are hundreds of thousands, if not millions, of corporate data items and stock prices available. But what if I told you that you can have access to all this data through one computer application at your fingertips?
Surely you have heard the old adage: "Fish for a man and he feeds for a day. Teach him to fish and he feeds for a lifetime." So today instead of stock picks, I'm going to empower you with a tool and resource. Think of it as your investment fishing pole.
This tool is called the Research Wizard. With this tool you can screen over 10,000 stocks on over 600 data items. You can develop and TEST your investment strategies on over 10 years of data. So you can actually discover what works and what doesn't. (In my opinion, the backtesting functionality of this product is its greatest attribute.)
Now you can stop wondering if a stock strategy works; you can actually test it out. You wouldn't fly in a plane or drive a car that wasn't extensively tested, so why invest in a strategy that hasn't been tested? You now have the opportunity to invest only in strategies proven to work over time and feel confident and comfortable in your investment decisions. With this tool, you can also build your own calculations. Don't like the way a certain predefined ratio is calculated? Want to add additional items to the ratio? Now you can do all this and more.
Within Research Wizard there are also dozens of prebuilt strategies that you can either use as is, or adjust as you see fit. And of course, you can create your own strategies from scratch. After spending some time running tests and tweaking a strategy, you end up with a screen that you can run as often as you'd like to trade. Do you like to trade weekly? Are you more tax sensitive and like longer holding periods? No problem. The Research Wizard allows you to test many different holding periods.
Running your favorite screen and implementing the resulting trades takes about as long as eating a bowl of cereal. In fact, you could probably eat your breakfast, run your screen and trade all at the same time.
So there you have it. The best stock idea I have for you isn't a stock idea at all; its a tool. Now you have the opportunity to use the Research Wizard to do your own homework and believe in yourself and your strategies. You'll be a better investor for it and your portfolio returns will illustrate this. Gain control! Put yourself in the driver's seat and stop complaining about the bumpy ride. Click here to learn how!
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