March 21, 2013

Meeting Rules  1. Ask questions, there are no stupid questions.  2. We meet Monthly, the 4 th Monday evening 6:30pm until 8:30pm. Mini meetups will be scheduled when possible.  3. Invite people who are interested in investing in stocks.  4. No one is here to make money off another person, only to improve our investing skills.  5. The main subject will be “CAN SLIM” at every meeting.

Tuscaloosa IBD is Part of Meetup

Meeting Format  Market Health  CAN SLIM  Portfolio Management Training  Stock Review

NASDAQ

S&P

DOW Jones

IBD Mutual Fund Index

Industry Groups

Market Pulse

Market Lengths

Super Cycle

Accumulation/Distribution Count

What Progress have we made?  FTD – March 5, 2013  NASDAQ up 0.93%  S&P 500 up 1.24%  NYSE up 1.15%  DJIA up 1.81%

IBD Market Wrap

CAN SLIM - 7 Traits  C=Current Earnings (25% Min.)  A=Annual Earnings (25% Min.)  N=New (Products)  S=Supply and Demand (Demand)  L=Leader (tops in its Group)  I=Institutional Sponsorship (Mutual Funds)  M=Market Direction (Going Up)

CAN SLIM  C = Current Big or Accelerating Quarterly Earnings and Sales per Share

CAN SLIM  A = Annual Earnings Increases: Look for Big Growth

CAN SLIM  N = New  Newer Companies, New Products, New Management, New High off properly formed chart bases

CAN SLIM  New Northern Pacific RR – First Transcontinental Railroad – 1900’s up 4,000% RCA - Commercial Radio – 1926 to 1929 up 1,050% McDonalds – Cheap Hamburgers – 1967 to 1971 up 1,100% Microsoft – Windows – 1993 to 1999 up 1,800% See HTMMIS Pages green book

CAN SLIM  New Where do I find New? ○ New America Section of IBD ○ Industry Snapshot on Mondays ○ New High List ○ Shopping Mall ○ Google

CAN SLIM  New 3-D Printing Graphene rHs

CAN SLIM  S = Supply and Demand  How is available vs. How many people want it.  Supply and Demand is more important than opinions.

CAN SLIM  Stock with 50 million outstanding shares moves quicker up or down than……  Stock with 5 billion outstanding shares moves slowly up or down

CAN SLIM  Outstanding Shares – Total shares issued and that are in the publics hands.  Floating Supply – Number of shares in the publics hands and available for trading.

CAN SLIM  Look for companies with young and innovative management.  Big companies with old management moves sloooooow!

CAN SLIM  Watch for companies with large stock splits and split often  2 for 1 and 3 for 2 OK  3 for 1, 5 for 1, etc. Very Riskey

CAN SLIM  Companies with Stock Repurchase Plans – Very Good.  Less stock – Higher price  Stocks with low Debt to Equity Ratio

CAN SLIM  How to evaluate Supply and Demand IBD’s stock tables show stocks trading volume for that day and the percent volume change the stock’s average daily volume in last 3 months.

CAN SLIM

 Go to MarketSmith – Screens Review C-Qtrly Earnings ACC EPS Growth (Weekly)  Go to Stock Checkup Review some of the stocks in the screens

Portfolio Management Training  How many stocks should I own?  Should I diversify?  How much money should I allocate to each stock?  What is weeding and feeding?  Should I use stops and limits?  Should I buy and sell at the Market price.

Order Types  Market Order  Limit Order  Stop Order  Trailing Stop  Trade Triggers  Conditional Orders

Market Order  A Market Order indicates you want the immediate execution of an order for a stated number of shares at the next available price without any other restrictions. This means your order will seek execution once it is received by the market (as long as the security is trading).

Market Order  Reasons for Market Order Price is less important Quick entry/exit Highly liquid securities

Limit Order  A Limit Order indicates the highest price your are willing to pay for a security, or the lowest price your are willing to accept to sell a security. Your order will be executed at your designated price or better. This helps protect your order from sudden volatility, but it also means you will only buy or sell the security if it reaches the price you are seeking.

Limit Order  Reason for a Limit Order: When Price is most important Target Entry/Exit Price

Market Order vs. Limit Order

Stop Order  Stop Market Order is an order which becomes a market order once the activation (or stop) price you specified has been reached or surpassed. Buy- stop market orders require you to enter an activation price above the current ask price. Sellers must enter the activation price below the current bid price.

Stop Order  Stop Orders can help you to limit your potential loss in an investment or to lock in profits. By setting an activation price below the market, if you are selling, you may be able to limit a potential loss should the stock price fall.

Stop Order  Stop Limit allows you to enter two prices: an activation (stop) price as well as a limit price. The activation and limit prices can be the same or you can choose a different limit price. A stop limit order becomes a limit order once the activation price has been reached or surpassed. When choosing a stop limit, buyers must enter an activation price above the ask price. Seller must enter an activation price below the current bid price.

Market Order

CAN SLIM Method  Growth Stocks only. They go up nice and slowly, but can fall like a brick. Stocks over $15.00 per share. Trades over 500,000 shares a day. Has earning over 25% Has sales over 25% Has institutional sponsorship Has a good RS line

CAN SLIM Method  Teaches us: What to buy When to buy When to sell  Buy on Technical's and Fundamentals  Sell on Technical's

Technical’s – Chart Patterns  Cup with Handle  Double Bottom  Saucer Base  Flat Base  Square Box  Ascending Base  High Tight Flag  3 Weeks Tight  4 Weeks Tight  5 Weeks Tight  Short Stroke  Pullbacks

Fundamentals  Earnings  Sales  Sponsorship  Return on Equity  U/D Volume ratio  Cash Flow

CAN SLIM  When can I buy? When the Market is in a Confirm Uptrend!!!!  When do I sell? When the Market is in Uptrend Under Pressure!! When the Market is in a Correction!!!!!!!!!!! When a stock is down 7 to 8 % of the BP

Importance of Cutting Losses  LOSS%  - 7%  - 20%  -33%  -50%  -75%  Gain Needed to Get Even  + 7.5%  + 25%  + 50%  +100%  +300%

You can be right 1 out of 4 times and only suffer a minimal loss!  Stock A +20% Gain = 20% Gain  Stock B -7% Loss = 12% Gain  Stock C -7% Loss = 4% Gain  Stock D -7% Loss = 3% Loss

You can be right 1 out of 4 times and still come out ahead!  Stock A +25% Gain = 25% Gain  Stock B -7% Loss = 16% Gain  Stock C -7% Loss = 8% Gain  Stock D -7% Loss = 1% Gain

Market Order

Portfolio Management Training  Whose advice should it listen to?  Can I buy and hold?

Portfolio Management Training  Watchlist Universal List – Maybe 100 Stocks Ready List – 10 Stocks – Working on BPs Buy List – 5 Stocks - Buy when Market is right

Portfolio Management Training  Number of Stocks to Own 3 to 5 Stocks  Position Size Divide your money by the number of stocks you plan to own.

Portfolio Management Training  How to buy a position? Buy best stock first. Buy 50 to 60% of the position and if it goes up buy the rest of the position. Then buy the 2 nd, 3 rd and so on the same way. If one of your positions is not working sell it and move your money into one that is working.

Go to MarketSmith for Stocks to review

  Pod Cast IBD Radio Show IBD Editorials

 The End

Cup with Handle

Double Bottom

Saucer Base

Flat Base

Square Box

Ascending Base

High Tight Flag

3, 4, 5 Weeks Tight Closes

Short Stroke

Handles

Pullbacks

More Rules

NASDAQ 1973 – 1990

NASDAQ To date

Go to Investors.com

My Preferred Method of Investing  CAN SLIM  Method formulated by William J. O’Neil  Method taught through IBD  IBD = Investors Business Daily –  IBD = Newspaper  IBD = Website – Investors.com  IBD + MarketSmith = Success

Market Health  Charts NASDAQ S&P 500 NYSE IBD Mutual Fund Index  Market Pulse  IBD’s Industry Sub-Group Rankings  IBD Market Wrap