Investment Help

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Wednesday, October 13, 2010

Picking Stocks

Sometimes I feel like the judge in the flowing robe overlooking the courtroom. I have weighed the evidence to the best of my ability and have arrived at my considered judgment. Two conclusions: (1) Index at least 80% of your retirement money, and (2) to beat the market over the long run, your best chance is to pick stocks yourself and avoid the management fees.

Of course, there are many approaches to picking stocks. I attended a presentation on one approach worth considering, this past week, at the monthly meeting of the American Association of Independent Investors (AAII) /Baltimore . The presentation was by Timothy J. Reazor of Investor's Business Daily. The program was developed by William J. O'Neill and is referred to as CAN SLIM, an acronym for the data the approach looks at to identify stocks to consider. It breaks down as follows:

C: Current Earnings
A: Annual Earnings
N: New Products
S: Supply and Demand
L: Leadership
I: Institutional Buying
M: Market Direction

These seven criteria are measured or graded and, in some cases, subject to a high hurdle to gain listing as a stock worth considering. One of the values of the presentation was that Mr. Reazor took the group through a routine, with the IBD newspaper that takes maybe 30 minutes a day, that will find stocks worth considering. The routine encompasses voluminous stock specific and industry specific information with the bottom line objective of identifying stocks on the move.

For the serious investor, there is a top-of-the-line online service whereby a stock symbol can be entered and a rating obtained along with the top-rated in the industry.

For those who might be interested, there are meetup groups around the U.S. where presentations are made and you can talk to users of the program.

Disclosure: This isn't intended as an endorsement of IBD or the CAN SLIM approach. I am not affiliated with IBD and receive no compensation from them. This post is solely informational.


  1. I gave up on trying to pick winners myself.

  2. Sometimes I can't help myself/ I'll go into a Panera Bread and start thinking about what a great business it is and just have to do some research on it when I get home. Sometimes I'll pick up some shares.
    With your knowledge of technology I'm surprised that you sometimes don't get the same urge when you see the new products.

  3. Sounds like good advice.

    I prefer to keep a lot more in individual stocks, but that's because I'm passionate about it and like to spend the considerable amount of time it takes. For most people, a few core holdings should suffice as a nice addition to their index funds.

  4. I enjoy picking stocks, especially in my sector of interest but only in my DIY account. My retirement money is 100% in indexed funds 70/30 stocks/bonds.