That is specialized in those of you which invest in individual stocks. I would like to share along the strategy Personally i have tried through the years to choose stocks that I have found to get consistently profitable in actual trading. I love to make use of a mix of fundamental and technical analysis for picking stocks. My experience has demonstrated that successful stock selection involves two steps:

1. Select a share while using fundamental analysis presented then
2. Confirm that this stock can be an uptrend as shown by the 50-Day Exponential Moving Average Line (EMA) being across the 100-Day EMA

This two-step process enhances the odds that this stock you select will be profitable. It offers an indication to offer Chuck Hughes containing not performed as expected if it’s 50-Day EMA drops below its 100-Day EMA. It is also a useful way for selecting stocks for covered call writing, yet another kind of strategy.

Fundamental Analysis

Fundamental analysis is the study of monetary data such as earnings, dividends and funds flow, which influence the pricing of securities. I use fundamental analysis to help you select securities for future price appreciation. Over the years Personally i have tried many means of measuring a company’s growth rate to try to predict its stock’s future price performance. I used methods such as earnings growth and return on equity. I have found that these methods usually are not always reliable or predictive.

Earning Growth
As an example, corporate net profits are be subject to vague bookkeeping practices such as depreciation, earnings, inventory adjustment and reserves. These are typical be subject to interpretation by accountants. Today more than ever, corporations are under increasing pressure to beat analyst’s earnings estimates which results in more aggressive accounting interpretations. Some corporations take special “one time” write-offs on their balance sheet for specific things like failed mergers or acquisitions, restructuring, unprofitable divisions, failed product, etc. Many times these write-offs usually are not reflected like a continue earnings growth but show up like a footnote on the financial report. These “one time” write-offs occur with an increase of frequency than you could expect. Many firms that make up the Dow Jones Industrial Average have such write-offs.

Return on Equity
One other indicator, which I have found is just not necessarily predictive of stock price appreciation, is return on equity (ROE). Conventional wisdom correlates a high return on equity with successful corporate management that is certainly maximizing shareholder value (the better the ROE the greater).

Which company is a bit more successful?
Coca-Cola (KO) using a Return on Equity of 46% or
Merrill Lynch (MER) using a Return on Equity of 18%

The answer is Merrill Lynch by measure. But Coca-Cola carries a greater ROE. How is this possible?

Return on equity is calculated by dividing a company’s post tax profit by stockholder’s equity. Coca-Cola is really over valued that its stockholder’s equity is only comparable to about 5% of the total monatary amount of the company. The stockholder equity is really small that nearly anywhere of post tax profit will develop a favorable ROE.

Merrill Lynch on the other hand, has stockholder’s equity comparable to 42% of the monatary amount of the company and needs a much higher post tax profit figure to create a comparable ROE. My point is that ROE will not compare apples to apples then isn’t a good relative indicator in comparing company performance.
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