Determining & forecasting future stock & options price fluctuations by gauging the internal market strength

 

FOLLOWING THE KISS RULE TO FIND WINNERS

Definition:

K.I.S.S = Keep it simple stupid - However crass it may sound it has been the one single fundamental that has kept us out of hot water and into Winners on a consistent basis. We like to keep things simple. In fact, our entire investing principles are simple and disciplined:
Buy a bucket of cheap stocks at a discount to fair value, sell when it reaches NCAV. Couldn't’ be simpler....right?
What we know is that we do not need to complicate things. We cut out the fat in investing and used discipline and simple ideas to generate phenomenal returns using Stock option alerts by Day traders Group

THE HOW:

 

By creating a TEN point checklist (which I’ll call the DT investing checklist) during my Wall Street Tenure I religiously filled out this checklist manually for literally hundreds of large cap and mid cap stocks during every spare moment I could find over and over again.

Before laptops came out I had to spend all my free time manually writing numbers into a checklist to see whether it passed my ten point investment checklist. After all, I was a master of the K.I.S.S (Keep It Simple Stupid) rule and if anyone could have slapped a patent on the KISS rule it would have to be me.

Here's my old checklist consisting of 10 items.

1. An earnings to price yield at least twice the AAA bond rate

2. P/E ratio less than 40% of the highest P/E ratio the stock had over the past 5 years

3. Dividend yield of at least 2/3 the AAA bond yield

4. Stock price below 2/3 of tangible book value per share

5. Stock price below 2/3 of Net Current Asset Value (NCAV)

6. Total debt less than book value

7. Current ratio greater than 2

8. Total debt less than 2 times Net Current Asset Value (NCAV)

9. Earnings growth of prior 10 years at least at a 7% annual compound rate

10. Stability of growth of earnings in that no more than 2 declines of 5% or more in year end earnings in the prior 10 years are permissible

So what happen to K.I.S.S.?

For the sake of making a long story short, after multiple rounds of testing and fine tuning, the best results came by narrowing the 10-point checklist down to what I call the FAB-4

1. An earnings to price yield at least twice the AAA bond rate

2. P/E (excluding extraordinary items) ratio less than 40% of the highest P/E ratio the stock had over the past 5 years

3. Total debt less than book value

4. Current ratio greater than 2

With the original list, there are some extreme requirements such as #.5. Trying to find a NCAV stock yielding at least 2.2% in dividends with stable growth and earnings is virtually impossible in today’s rapidly evolving stock market.

Interpretation:

If your like most and are having a hard time wrapping your head around this or simply just don't have the time then simply do what some of the largest Hedge Funds on earth do and just hire a professional and affordable Trade Alert service such as DaytradersGroup.com  We use the latest in Hi-Tech proprietary software and technical analysis to determine future price forecasts that include Stocks that fit the stringent criteria of our FAB-4 List above, Let the PROS do the legwork so you don't have to