AAII Home AAII Blog

How I Choose a Stock to Buy or Sell

This week I subbed in for Charles Rotblut on the weekly radio show MoneyLife with Chuck Jaffe. Each week Charles chooses a “buy of the week” and a “sell of the week” and provides some editorial guidance on his reasoning.

In order to prepare for the interview, I had to think, “what qualities do I look for in a stock and, subsequently, what would prompt me to sell it?”

I started off by brainstorming what the qualities of a “good stock” are in hopes that I could reverse these metrics to create a list of sell metrics. By no means is this a static list, and the metrics mentioned below represent my personal views. Additionally, the analysis described here focuses primarily on fundamental metrics and “bottom up” analysis (focusing on individual attributes and fundamental factors of a particular company or stock) as opposed to “top down” analysis (which focuses on macroeconomic factors to determine which sectors and industries will outperform or underperform the market). Continue Reading »

Let AAII Guide You to Top Mutual Fund Selections

This month’s AAII Journal features our famed Guide to the Top Mutual Funds. The guide provides in-depth analysis of approximately 1,600 promising no-load and low-load funds. Plus, you’ll learn how to select the best funds for your own portfolio. If you Join AAII Today for only $29, you will get this widely acclaimed guide for free. Barron’s calls it “one of the best [guides] around on the subject.” Join Now

More on AAII.com

  • Earnings Estimates – AAII’s Charles Robtlut shows how earnings surprises and earnings estimate revisions can drive stock price momentum.
  • Going From a Stock Screen to a Real Portfolio – When investing based on a screen, you should have preset rules regarding diversification, choosing stocks, selling and tax management, as John Reese of Validea explains in this article.

Highlights from this month’s AAII Journal


AAII Sentiment Survey

Pessimism plunged, as neutral sentiment rose to its highest level since the election. More about this week’s results.

This week’s results:
  • Bullish: 35.8%, up 3.0 points
  • Neutral: 36.5%, up 3.5 points
  • Bearish: 27.7%, down 6.5 points
Historical averages:
  • Bullish: 38.5%
  • Neutral: 31.0%
  • Bearish: 30.5%

Take the Sentiment Survey.


The Week Ahead

Wayne Thorp, AAII vice president and senior financial analyst, will be speaking to the AAII Los Angeles Chapter on Saturday, February 18.

Earnings season strides forward with 57 members of the S&P 500 scheduled to report. Included in this group is Dow Jones industrial component Cisco Systems. Inc. (CSCO) on Wednesday.

The week’s first economic reports will be the January consumer price index, January retail sales, the New York Fed’s February Empire State manufacturing survey, January industrial production, December business inventories, the February housing market index and December Treasury international capital, all of which will be released on Wednesday. Thursday will feature January housing starts and building permits and the Philadelphia Fed’s February business outlook survey.

Five Federal Reserve officials will make public appearances: Richmond president Jeffrey Lacker, Atlanta president Dennis Lockhart and Dallas president Robert Kaplan on Tuesday; Boston president Eric Rosengren and Philadelphia president Patrick Harker on Wednesday. Chair Janet Yellen discusses semiannual monetary policy before the Senate Banking Committee and the House Financial Services Committee on Tuesday and Wednesday, respectively.

The Treasury Department will auction $7 billion of 30-year Treasury inflation protected securities (TIPS) on Thursday.


Local Chapter Meetings

AAII Local Chapter Meetings offer you a variety of presentations from expert speakers who will give you their view on the world of investing. A bonus of attending a Chapter Meeting near you is the opportunity to meet other AAII members who share your interest and enthusiasm for investing. You can even share the Chapter experience with your family and friends by inviting them to attend Chapter Meetings with you! Upcoming Meetings »

 

One thought on “How I Choose a Stock to Buy or Sell”

  1. To Jaclyn McClellan, re: How I Choose a Stock to Buy or Sell

    Thank you for this article. It certainly looks good to one who has not done any of this stuff yet.
    Would you share the time frame(s) that you use as you work through your evaluations? I assume they vary depending on the particular metric. How far back do you look for increasing ROE, positive estimated earnings growth, etc. Two years of new metrics, going back to 2007-2008, six months?
    Thank you for your help.

     

Leave a Reply

Your email address will not be published. Required fields are marked *