How I choose my trades

By: ispeculatornew
Date posted: 01.13.2010 (5:00 am) | Write a Comment  (4 Comments)

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On Monday, I was asked about the spreadsheet that I use when deciding on possible and potential trades. So here you go, you can start by downloading the file and I will briefly explain how I use it:

DOWNLOAD HERE

You can see the different stocks that I track (currently 23), which are sorted by the subcategory (column 3). If you are a regular reader of this blog, most of those names will ring a bell, I have either traded or discussed almost all of them.

Column 4 is obviously the price. I do not pay that much attention to the price except perhaps avoiding stocks that would trade under 5$, these can become very volatile, hard to borrow, etc.

Column 5: this includes the annualized earnings per share

Column 6, 7 & 8: the PE ratio is one of the primary indicators that I use when looking for stocks that are undervalued or overvalued.  There are also estimates from Bloomberg for PE ratios for the next two years which also give interesting informations.

Column 9: Total return YTD is not as much help right now with the year just starting but as the year goes on, it helps to give an indication of stocks that could have moved differently from others, etc.

Column 10: The sales growth is a clear indication of how quicky each company is growing, in terms of revenues only.

Now obviously, I do not decide on a trade simply by looking at this table, but it is what gives me ideas which I then take the time to research in details, looking at news, statements, visitor stats, etc, etc. I also use stockcharts.com to get the graphs that I use. I generally look for one of two trade ideas:

-Stocks that trade at similar PE ratios, then deciding if it is warranted or if one stock is undervalued.

-Stocks that are similar because they are in the same sub-category (such as the trade done yesterday on Expedia & Priceline), these also offer many possibilities.

Again, this is just a start but it will give you a good idea of how I get my trade ideas.

Any comments/questions?

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4 Comments

  1. Comment by François — January 13, 2010 @ 2:09 pm

    Really interesting! I want to know more about it. How do you update the file? How often do you update the spreadsheet? How often do you revise the file? Why some cells are empty (are they new stock?)? Are you putting an alert when one ratio meet a pre-specified criteria? What are those alerts would you check for?

  2. Comment by IS — January 17, 2010 @ 8:55 pm

    @Francois – File is updated daily and yes, many different things are changed daily.. as for alerts, not really. I only look for the best trade available when it’s time to trade!

  3. Comment by Zavi — January 13, 2010 @ 2:36 pm

    That’s great. And why have you only chosen those 23 stocks? There are some others like NWSA, AOL, ANSW, INET, SPMD, …

  4. Comment by IS — January 17, 2010 @ 8:56 pm

    @Zavi – I find it difficult to follow too many stocks. But for example, I will probably add AOL eventually. It’s just so new right now, a bit difficult to judge it, I might write about this soon.

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