This really is specialized in people who wish to spend money on individual stocks. I wants to share with you the techniques Personally i have tried through the years to pick out stocks that I have found to become consistently profitable in actual trading. I want to work with a mix of fundamental and technical analysis for selecting stocks. My experience has shown that successful stock selection involves two steps:

1. Select a standard while using the fundamental analysis presented then
2. Confirm how the stock is an uptrend as indicated by the 50-Day Exponential Moving Average Line (EMA) being above the 100-Day EMA

This two-step process enhances the odds how the stock you select will probably be profitable. It also provides an indication to trade stock which includes not performed as you expected if it’s 50-Day EMA drops below its 100-Day EMA. It is a useful means for selecting stocks for covered call writing, quantity strategy.

Fundamental Analysis

Fundamental analysis could be the study of financial data for example earnings, dividends and money flow, which influence the pricing of securities. I use fundamental analysis to aid select securities for future price appreciation. Over recent years Personally i have tried many strategies to measuring a company’s growth rate so as to predict its stock’s future price performance. I used methods for example earnings growth and return on equity. I have found these methods aren’t always reliable or predictive.

Earning Growth
As an example, corporate net income is at the mercy of vague bookkeeping practices for example depreciation, cash flow, inventory adjustment and reserves. These are typical at the mercy of interpretation by accountants. Today more than ever, corporations are under increasing pressure to overpower analyst’s earnings estimates which results in more aggressive accounting interpretations. Some corporations take special “one time” write-offs on the balance sheet for specific things like failed mergers or acquisitions, restructuring, unprofitable divisions, failed website, etc. Many times these write-offs aren’t reflected as being a drag on earnings growth but instead show up as being a footnote over a financial report. These “one time” write-offs occur with an increase of frequency than you could expect. Many companies that constitute the Dow Jones Industrial Average have such write-offs.

Return on Equity
Another popular indicator, which I have found isn’t necessarily predictive of stock price appreciation, is return on equity (ROE). Conventional wisdom correlates a higher return on equity with successful corporate management that is maximizing shareholder value (the higher the ROE the higher).

Recognise the business is much 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 measure. But Coca-Cola features a better ROE. How is that this possible?

Return on equity is calculated by dividing a company’s net gain by stockholder’s equity. Coca-Cola is so over valued what has stockholder’s equity is just corresponding to about 5% from the total market price from the company. The stockholder equity is so small that almost anywhere of net gain will make a favorable ROE.

Merrill Lynch alternatively, has stockholder’s equity corresponding to 42% from the market price from the company and requirements a greater net gain figure to generate a comparable ROE. My point is ROE will not compare apples to apples so therefore is not an good relative indicator in comparing company performance.
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