My Top 5 Stock Pick Sources for 2005
1. Insider Buying Information
Insiders are company's CEO, Chairman, board directors, executive
vice president of various departments.
Insider buying information top my list for obvious reasons.
Insiders have lots of reasons to sell their shares: buying a
house, huge vacation expense, etc. However, there is usually
only one reason when insiders buy their company's shares with
their personal money: the insiders believe the stock price are
cheap and they can make money by buying their own stocks.
Insider buying information is also very informative to
understand market sector movement. Many time I looked at the
insider buying information from sector point of view. Certain
sector during certain period of time constantly had insider
buying activities from different companies of the same sector,
which could indicate a sector wide undervaluation or
bullishness. That was exactly what I found in late 2003 and
early 2004 when I found insiders of lots of oil and natural gas
companies constantly buying their stocks. Eventually I picked
two oil and gas stocks in late 2003 and early 2004 Whiting
Petroleum (ticker WLL) and Chesapeake Energy (Ticker CHK) from
insider buying information and they have been huge success for
my premium investment newsletter Blast Investor Real-time Plus
(BIRTP) and rewarded myself financially very significantly.
2. Guru Watch
It is certainly worth the effort to track stock picks or ideas
from legendary gurus such as Warren Buffet, Eddie Lambert, Jim
Rogers, etc.
Wall Street Journal is great source of investment and financial
information. My 2003 stock pick PetroChina (PTR) was from an
article of Wall Street Journal, which published news of Warren
Buffet buying PTR. I immediately bought into PTR stock on the
same day that I read the article and profited handsomely from
this pick.
Warren Buffet is the best value investor in the world and you
can not afford to ignore him. One way to track Warren Buffet
picks is to go to Yahoo Finance and then read news headlines
under stock ticker of BRK-A.
Recently, internet information grew so large and I believe it is
now much easier to track gurus from web rather than reading
newspapers or magazines. An easier way to track guru picks is to
use tracking services offered in the web. Here I highly
recommend the tracking service provided by Gurufocus.com.
Gurufocus tracks almost all the value-oriented Wall Street
gurus. Their list of gurus is huge, Warren Buffet, Edward
Lambert, George Soros, etc. They even publish a newsletter
alerting you the latest guru buy and sell actions. Their service
is great and best yet, it is all free!
3. Software Screening Tool
BlastInvest operates internally a Mysql based relational
database storing about seven thousand stocks with all kinds of
valuation metrics and tools that I can do for Benjamin Graham
NCAV ranking, return on equity modeling, low pe or low price to
sale screening, etc. We update database information every week
and I constantly mine the database looking for the huge winner
that can reward both me and my newsletter readers.
Insider buying information could be even more powerful when you
can combine insider buying information with valuation or
strategy screening, which exactly what we do at BlastInvest with
this powerful internal relational database.
However, I found the free or cheap screening tools out there in
the web are not impressive. Validea.com tool is nice, but it
lacks the powerful feature that I want. Yahoo tool or MSN tool
works, but still they are not for power value investors.
Therefore, I may rank my internal screening tool very high for
getting stock leads, you may be dissappointed if you do not have
access or can not pay for those powerful tools at reasonable
cost.
4. Online Message Board Networking
Stock message boards are wild and you may be surprised that I
put this as one of top sources of information for getting stock
leads. Well indeed, I got tips and found very solid stock leads
from internet message boards.
Actually, I started myself as quite wild BBS stock guru many
years ago before I started blastinvest.com newsletter business.
Lots of Chinese American friends who frequently visit big online
BBS (mitbbs.com, or goofiz.com) would know my past track record
very well. My past BBS investment performance certainly beat
performance of most if not all of the value mutual funds hands
down. My past history certainly can tell you something on the
nature and quality of message boards. Sure, most of BBS members
probably are not investing gurus, and some folks in the stock
forum may well be dangerous stock promoters or hypers. But
certainly there are some excellent stock gurus there and there
are valuable investing or stock pick information there. So just
be careful and do your homework when you use information from
online stock boards.
Two of the well known value investing forums in US are
Valueforum and Value Investor Club. Unfortunately, Valueforum is
fee based message board and you can not post any messages
without paying fee. Value Investor Club seems to reject
beginners or amateurs and they only want gurus (maybe Wall
Street Gurus) offering stock tips to each other.
I myself certainly disagree with approaches of Valueforum or
Value Investor Club. That is why Blastinvest LLC recently
launched a free forum dedicated for individual value investors:
value-investing-forum.com. For more information on why you
should participate in a forum regardless whether you are a value
investing beginner or a savvy value investor, please click here:
http://value-investing-forum.com/viewtopic.php?t=483
5. Traditional Newspapers and Magazines
This group includes Investor's Business Daily, Forbes, Fortune,
Barrons, etc, I read them all from time to time.
If you live near New York city and tune in to Bloomberg radio,
you are going to hear bombardment of ads such as "Barrons, the
best source of stock investing information".
However, my rating on their capability of giving me stock leads
or ideas are poorer than above channels. The stock picks
published in the public media are pretty mediocre.
Of course, I still believe they are very useful information to
understand economics and to know what Wall Street gurus are
doing or thinking. So they may not be worth subscription fee for
you to pay, they are certainly worth your time to visit public
library once a while to read them.