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My Top 5 Stock Pick Sources for 2005
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Author: Henry Lu Article source: http://www.blastinvest.com/. Used with author's permission.
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. Article by Henry Lu of BlastInvest LLC, a premium investment newsletter publisher in Connecticut. Visit http://www.BlastInvest.com for FREE "how-to" investing assistance, web services and more.
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