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First Steps and Favorite Tools for New Investors

How do you find, learn about, and keep on top of your investments?

By Travis Johnson, Stock Gumshoe, November 18, 2014

I get asked “how do I start investing” questions quite frequently, and also questions about what kinds of online (or other) tools I use to research stocks — so I thought I’d start the discussion about this by sharing a few of my favorite things.

First, if you have never invested before and don’t think you understand what a stock is or how it trades or why there’s a stock market, take your time. Read a couple books (my favorites — easy reads for people who’ve never traded before — are The Little Book that Beats the Market and One Up on Wall Street).

ToolsSecond, don’t buy or trade individual stocks unless you find it interesting. This is a hobby, and it can be a profitable one, but there’s no point in doing it unless you like learning about companies or trading techniques and like to follow individual stocks. If you don’t, there’s nothing wrong with buying low-cost index funds or, if you’re a little bit interested, selecting some favorite sectors or better active managers (they still have to be cheap) to see if you can beat the market by a little bit. You’re not likely to get rich trading stocks, so if it’s not a pleasurable experience for you — don’t do it. Investing in the stock market is an important and relatively easy way to get a return on your nest egg that beats inflation, but investing in stocks is far riskier than investing in the stock market.

Once you’ve decided to invest, how do you find stocks or keep learning or what tools do you use? I’ll list a few of my favorite sources and tools, and hopefully others will chime in:

Charting and data:
I’m not a technical trader or chartist, but charts are an excellent visual way to scan the history of a company. I like YCharts for this because I can graph companies’ fundamentals — the history of their price/book valuation, the history of their ROE, or hundreds of other metrics — and compare them to other companies. Even the inexpensive version of Ycharts is fairly expensive ($40 a month, I think, they have a free trial), but I invest in YCharts because I need something better than the free data sources but more accessible and affordable than a Bloomberg terminal, and this is the best I’ve found for that middle ground. This is my go-to source for historical data as well, it’s very useful to be able to look at ten years of a company’s revenue, expenses, balance sheet, etc. When I look at a new stock, I try to take at least a quick look at their historical financials before I learn the “story” of the company — if you see that a company has not grown in ten years, you might interpret the story of their fantastic growth prospects differently. Morningstar is my favorite “less expensive” source of data, though you have to pay a bit (much less than YCharts) to go back more than five years.

YCharts is also my favorite screening tool, though the best version of it is not free. Morningstar also has excellent screening tools (also better for the paid version). There are many free screening tools on the web as well, nearly every financial portal site (Yahoo Finance is the most popular) has one, so try those first — they will meet many needs.

I try to read the Wall Street Journal and Financial Times and Barron’s frequently, just to keep a handle on what the overall sentiment is and get some variety of perspective. If you have a focus on a particular sector, you’ll likely find that industry news sources/websites (what we used to call “trade journals”) provide better coverage and are worth browsing from time to time. I browse SeekingAlpha sometimes for ideas and perspective (keeping in mind that it’s mostly opinion — always read both bear and bull arguments about a stock if you can), as well as Yahoo Finance and Marketwatch when I have time to browse.

I keep Google search alerts on all the companies I’m interested in to help me pull in as many data points as possible. I also use both Yahoo price alerts and YCharts alerts when I find companies that I’m interested in but where I don’t like the price — Yahoo will email you when ticker XYZ hits a specific price, YCharts will alert you when any number of data points changes for a favored stock.

Managing Information:
Once you have a portfolio of a few companies, and are researching a dozen others for possible investment, it becomes difficult to keep track of what you’re learning. I like to use Evernote to manage this, it is a fantastic free (also a paid version) clipping service that lets you “clip” articles or full web pages and tag them (with a ticker, or keywords) and keep them in folders if you choose — then it’s all both organized and very searchable so you can find that great article that you vaguely remember from six weeks ago. You can also forward emails to your Evernote account, and they’ll be saved and organized in the same way.

That’s just a quick note to get this process started, I’ll add to it as I think of other tools or sources and would appreciate it if readers would share their own thoughts or favorites with a comment below — thanks!



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4 years ago

Danmcco posted in answer to this question: What method(s) do yo utilize to keep the SpreadSheets fresh? https://www.sgumdev.stockgumshoe.com/2017/09/cisco-chang-charlie-part-3/comment-page-6/#comment-4953039
SoGiam $VICL np, $SCYX small long. I use Fund Manager.
https://www.fundmanagersoftware.com Than you Dan! Best2ALL

👍 11466
4 years ago
Reply to  SoGiAm

I recommend downloading the trial software. It updates all my US and Canadian Stocks, options, warrants, MFs etc online whenever i want.
Regular version is $99 pro is $295 . Biggest differences come down to Max Investments in a Portfolio 500 vs. 5,000 (pro) and some extra analytics.

It will do any number of portfolios. I have two each for my two kids, three different joint accounts (td, questrade, IB) and TFSA (tax free savings) and RRSP (retirement account)s for my wife and the same for me.

Can connect directly to most major us brokerage firms to update.

The portfolios can be rolled up in a variety of ways.

I had previously used MS Money then went to Portfolio Manager Gold (still my favourite but also discontinued) and now Fund Manager.

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4 years ago

Fellow #digitalnomads here is a list of cool stuff ->
#Awesome #DigitalNomads Awesome

A curated list of awesome resources for Digital Nomads.
Looking for contributors. Submit a pull request if you have something to add 🙂

Please check the contribution guidelines for info on formatting and writing pull requests
https://github.com/cbovis/awesome-digital-nomads Best2All!

👍 11466
4 years ago

#1stTime – Link: https://www.sgumdev.stockgumshoe.com/reviews/motley-fool-rule-breakers/david-gardners-the-next-amazon-com-stock/comment-page-1/#comment-4968174
Author: Eliza Comment: Timeless #ThankYOU 🙂
For a 25 year old investing $500 I would use Robinhood app. You will get free trades and you can diversify even a small amount. You can also buy something already diversified like QQQ. It is an ETF, or exchange traded fund, which means one share contains little pieces of a lot of our tech favorites, such as Apple, Microsoft, Google, etc. One QQQ gives you a nice diversified core to your small portfolio with good returns, then you can pick and add favorites to swing trade or to buy and hold! PayPal also seems to be a Fool favorite for buy and hold and it is affordable. Good luck!

Full article link: https://www.sgumdev.stockgumshoe.com/reviews/motley-fool-rule-breakers/david-gardners-the-next-amazon-com-stock/

You are receiving this email because you subscribed to the discussion thread on one of our articles. You can remove this subscription or otherwise manage your discussion subscriptions here: https://www.sgumdev.stockgumshoe.com/comment-subscriptions/ #Excellent Eliza!

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👍 11466
4 years ago

A #Glance at Finviz.com this day 20180117
icker Last Change Volume Signal
RCON 3.03 77.71% 46088628 Top Gainers
BEBE 6.10 37.39% 129392 Top Gainers
MYSZ 2.66 24.30% 29155232 Top Gainers
HAWK 45.05 23.42% 31950014 Top Gainers
NEWA 15.80 21.54% 330615 Top Gainers
NCTY 1.18 18.00% 14122333 Top Gainers
APTO 2.80 12.90% 1585220 New High
ACUR 0.61 14.02% 87789 New High
NWBO 0.37 9.97% 3878355 New High
MRTX 24.25 -2.02% 1171545 New High
DST 83.63 0.14% 2238871 Overbought
FLR 58.03 1.68% 1905746 Overbought
NUAG 24.42 0.16% 1327912 Unusual Volume
NASH 28.89 -1.05% 40730 Unusual Volume
RCON 3.03 77.71% 46088628 Unusual Volume
FNDB 38.58 -0.39% 1018493 Unusual Volume
FOXA 36.29 -1.20% 7149792 Upgrades
ABIL 0.53 -6.25% 653366 Earnings Before
BRN 2.30 4.13% 3951 Insider Buying

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👍 11466
4 years ago

Author: Investor Clouseau Comment:
$humble advice
Investing in cheap stocks looking for huge amounts of growth is, as mentioned here already, pretty much gambling. Tinkering around with things like options on a very limited budget (something I’ve done in the past with “mad money”) doesn’t allow you to buy enough different positions to catch enough of the rare big winners and more than cover the many assured losses.

If you decide to go the boring but more-or-less tried and true route of long term, sturdy, usually dividend paying stocks then my advice (and something I still mentally struggle with) is that you don’t need to buy huge positions (1,000 or even 100 shares) at a time. If a stock is $50/share don’t get hung up on only being able to buy 4 shares if all you have is $200 to add to your portfolio at the time. To me, initially it always seemed like a much better idea to buy 100 shares of a $2 stock in that scenario, and that just isn’t true. A few people here have explained it as $200 going up 10% is the same whether it’s spread across 4 shares or 400 shares.

There’s quite a few newer investing apps that can (if you enable recurring auto-deposits) function similarly to a 401k. I downloaded and experimented with the Stash app, it doesn’t give you the flexibility of an online trading account, but it’s educational to experiment with and I think the 30+ funds they let you choose amongst are decent. I’ve set mine to ding me for about $15/week just to see where it ends up at in a year. I think Nerdwallet.com has a bunch of investing app reviews, and if you start small with something like that in a year or two you could cash out and maybe fund a fully capable online trading account and start your portfolio that way. You could get a debit or credit card that give cash back and use it for EVERYTHING, if you can manage that without running a balance it’s like getting a ~2% discount on literally everything you buy and bills paid. Then at the end of the year put that money some investments.

Just kind of spitballing advice here, might be worth checking out Investopedia.com too, they’ve got a great stock simulator that’ll let you open and experiment with fake money in the real stock market setting. It’s an informative website, and it can also curb being over eager and riskier trading if you follow along for a bit and realize what pans out and what doesn’t.

Comment Link: https://www.sgumdev.stockgumshoe.com/2017/09/microblog-performance-of-mampillys-true-momentum-and-extreme-fortunes-premium-newsletters/comment-page-1/#comment-4968534

72 – The Rule of 72 > Stocks WITH Dividends
Thank Y”OU Clousea! Long #Gr8Gummunity! #Best2ALL! 😉

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👍 11466
4 years ago

11 Powerful Investing Quotes From The World’s Best Investors
January 19, 2018 4:45 pm by Sure Dividend

See also the 8th wonder of the world according to Einstein > https://www.sgumdev.stockgumshoe.com/2016/04/microblog-72-the-rule-of-72/

Investing is unique in that there is tremendous opportunity to learn from the best in the business.

Investors like Warren Buffett, Seth Klarman, Joel Greenblatt and Benjamin Graham have made a concentrated effort to educate investors everywhere through their writing, speeches, and other communications.

This article will summarize some of the best quotes from the most talented investors in the world, and describe how we can learn from the teachings of these remarkable investors.

What’s more, the end of this article has a special discount offer for ValueWalk readers for the Sure Dividend Newsletter. The Sure Dividend Newsletter finds the 10 best high-quality dividend growth stocks every month for the long run. The special offer expires this Sunday.

Warren Buffett

Warren Buffett is the Chairman and Chief Executive Officer of Berkshire Hathaway. The investment conglomerate owns a number of wholly-owned subsidiaries like Dairy Queen, GEICO, and Fruit of the Loom, while also owning a diverse basket of marketable securities like Coca-Cola (KO), Apple (AAPL), and American Express (AXP).

Warren Buffett is known for being a notoriously long-term investor, taking significant positions in high-quality businesses and holding them for decades. This is largely possible because of the quality of the businesses he invests in:

“Time is the friend of the wonderful company, the enemy of the mediocre.”

Buffett, although known primarily as a value investor, has shown a willingness to pay a higher price for these types of high-quality businesses.

“It’s far better to buy a wonderful business at a fair price than a fair business at a wonderful price.”

This begs the question – what determines a business’ quality?

Buffett believes that the key characteristic of a high-quality business is the ability to prosper through periods of dramatic change. In other words, he wants to buy businesses that will profit from a lack of change (rather than depending on specific change, which can be far more unpredictable).

“Our approach is very much profiting from lack of change rather than from change.”

Seth Klarman

Seth Klarman is the billionaire hedge fund manager who runs the Baupost Group, a risk-averse value investment firm.

The most notable characteristic of Klarman’s investment style is his long-term mindset. He wants to buy businesses trading below his perception of their intrinsic value and then patiently wait until they experience meaningful price appreciation.

“The single greatest edge an investor can have is a long-term orientation.”

A subtle component of this investment strategy is liquidity. Klarman wants to be a provider of liquidity, not a demander of liquidity. This allows him to be the buyer of the most highly mispriced assets on the stock market, usually during periods of economic turmoil.

“The trick of successful investors is to sell when they want to, not when they have to.”

While this sounds sophisticated, it is far from risky. Klarman is extremely risk-averse. He believes that avoiding loss is one of the critical components to a successful investment approach.

“The avoidance of loss is the surest way to ensure a profitable outcome.”

Joel Greenblatt

Joel Greenblatt is the founder of Gotham Capital (a hedge fund which has since been discontinued) and Gotham Asset Management, a mutual fund company. Both entities have had spectacular investment returns and beaten the market over meaningful periods of time.

One reason why Greenblatt’s performance has been so strong is his ability to remove emotions from his portfolio management decisions. As the following quote illustrates, investment merit is the only factor that Greenblatt allows to influence his investment choices.

“Decisions to buy and sell stocks should be based solely on the investment merits.”

Greenblatt avoids emotional biases, but this does not give us much insight into how he identifies investment opportunities.

Greenblatt’s strategy relies on the concept of a “margin of safety,” which was pioneered by Benjamin Graham – another influential investor who we’ll discuss later. Essentially, Greenblatt wants to conservatively assess a security’s true value and then purchase the investment at a price far lower than that.

“One way to create an attractive risk/reward situation is to limit downside risk severely by investing in situations that have a large margin of safety.”

Price fluctuations are the main reason why such interesting investment opportunities exist.

“Prices fluctuate more than values—so therein lies opportunity.”

Ben Graham

Benjamin Graham is commonly called “the Father of Value Investing” and the “Dean of Wall Street,” and has played an important role in educating millions of successful investors (including the others discussed in this article).

There are three major philosophical influences that Graham brought to the world of investing.

The first is the laser-sharp focus on quantifying the valuation of marketable securities. In his critically-acclaimed book The Intelligent Investor, Graham wrote the following on his goal in writing the book:

“…we hope to implant in the reader a tendency to measure or quantify. For 99 issues out of 100 we could say that at some price they are cheap enough to buy and at some other price they would be so dear that they should be sold. The habit of relating what is paid to what is being offered is an invaluable trait in investment. In an article in a women’s magazine many years ago we advised the readers to buy their stocks as they bought their groceries, not as they bought their perfume. The really dreadful losses of the past few years (and on many similar occasions before) were realized in those common-stock issues where the buyer forgot to ask ”How much?”

Secondly, Benjamin Graham is famous for pioneering the aforementioned concept of a “margin of safety,” which was referred to earlier by fellow super-investor Benjamin Graham. The margin of safety is the difference between an investments true value (also called intrinsic value or fair value) and its market value. The larger a margin of safety, the better.

Lastly, Graham developed the concept of “Mr. Market” to help investors explain and endure through the irrational movements of the stock market. Graham wrote the following about Mr. Market:

“Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr. Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers either to buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.

If you are a prudent investor or a sensible businessman, will you let Mr. Market’s daily communication determine your view of the value of a $1,000 interest in the enterprise? Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.

The true investor is in that very position when he owns a listed common stock. He can take advantage of the daily market price or leave it alone, as dictated by his own judgment and inclination. He must take cognizance of important price movements, for otherwise his judgment will have nothing to work on. Conceivably they may give him a warning signal which he will do well to heed-this in plain English means that he is to sell his shares because the price has gone down, foreboding worse things to come. In our view such signals are misleading at least as often as they are helpful. Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.”

Final Thoughts

The investors discussed in this article have many traits in common, with the most important characteristic being their remarkable track records of investment success.

There are also other similarities. The investors discussed in this article seek to buy high-quality businesses trading at fair or better prices. Quality and price are the two cornerstones of their investment philosophies.

With that in mind, the Sure Dividend Newsletter uses a quantitative ranking system to identify high-quality companies trading at attractive prices, and then provides detailed qualitative and quantitative analysis on each recommendation.

We are currently offering a special deep discount coupon for ValueWalk readers. Use the coupon code VALUEWALK when you join to get 25% off, forever. This offer expires this Sunday.

The Sure Dividend Newsletter offers a 7-day no-risk free trial. Start yours today and begin benefitting from this unique, conservative investment strategy.
Note: Be sure to enter the coupon code VALUEWALK when you sign up for your 7 day trial…. #Best2ALL!

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👍 11466
3 years ago

Battle for Investment Survival by Loeb is a classic in showing when to buy value situations.

2 years ago

Zero commission for trades at TD Ameritrade starting today, October 03, 2019.
Zero commission for trades at Charles Schwab and E-Trade beginning October 07, 2019.
Interactive brokers and Robinhood is already zero commission for trades.
See your broker(s) for details and further information.

Singing in the Rain 🙂
Tunez > https://twitter.com/Bowie1960s/status/1179098639286898689?s=20