This is focused on people who want to put money into individual stocks. I want to share along the methods Personally i have tried through the years to choose stocks i have realized to get consistently profitable in actual trading. I want to use a combination of fundamental and technical analysis for picking stocks. My experience has shown that successful stock selection involves two steps:

1. Select a regular using the fundamental analysis presented then
2. Confirm the stock is definitely an uptrend as indicated by the 50-Day Exponential Moving Average Line (EMA) being higher than the 100-Day EMA

This two-step process enhances the odds the stock you end up picking will likely be profitable. It now offers an indication to market Chuck Hughes containing not performed not surprisingly if it’s 50-Day EMA drops below its 100-Day EMA. It can be another useful way for selecting stocks for covered call writing, a different sort of strategy.

Fundamental Analysis

Fundamental analysis may be the study of financial data including earnings, dividends and cash flow, which influence the pricing of securities. I use fundamental analysis to help you select securities for future price appreciation. Over the years Personally i have tried many methods for measuring a company’s rate of growth so that they can predict its stock’s future price performance. I used methods including earnings growth and return on equity. I have realized why these methods usually are not always reliable or predictive.

Earning Growth
By way of example, corporate net profits are be subject to vague bookkeeping practices including depreciation, income, inventory adjustment and reserves. These are all be subject to interpretation by accountants. Today inside your, corporations are under increasing pressure to overpower analyst’s earnings estimates which leads to more aggressive accounting interpretations. Some corporations take special “one time” write-offs on the balance sheet for such things as failed mergers or acquisitions, restructuring, unprofitable divisions, failed product, etc. Many times these write-offs usually are not reflected as being a drag on earnings growth but instead show up as being a footnote on the financial report. These “one time” write-offs occur with an increase of frequency than you may expect. Many firms that form the Dow Jones Industrial Average have taken such write-offs.

Return on Equity
One other indicator, which i’ve found is just not necessarily predictive of stock price appreciation, is return on equity (ROE). Conventional wisdom correlates an increased return on equity with successful corporate management which is maximizing shareholder value (the higher the ROE the better).

Recognise the business is a lot more successful?
Coca-Cola (KO) using a Return on Equity of 46% or
Merrill Lynch (MER) using a Return on Equity of 18%

The reply is Merrill Lynch by any measure. But Coca-Cola features a higher ROE. How is possible?

Return on equity is calculated by dividing a company’s net gain by stockholder’s equity. Coca-Cola can be so over valued that it is stockholder’s equity is merely corresponding to about 5% from the total rate from the company. The stockholder equity can be so small that just about any amount of net gain will produce a favorable ROE.

Merrill Lynch conversely, has stockholder’s equity corresponding to 42% from the rate from the company as well as a much higher net gain figure to generate a comparable ROE. My point is the fact that ROE won’t compare apples to apples so therefore is not a good relative indicator in comparing company performance.
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