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how to make money in stocks and how to get rich_121 Navigation: Main page » how to make money in stocks and how to get rich Author: how to make money in stocks and how to get rich The first "additional" news item in Investor's Business Daily is the earningsper share (EPS) rank, which calculates every company's growth in earnings per share over the last five years and the stability of that growth. A company's percentage change in earnings per share for the two most recent quarters, versus the same quarters a year ago, is combined and then averaged with its five years' earnings growth record. The result is compared with al other comon stocks in the price tables and ranked on ascale from 1 to 99, with 99 being the highest. An 80 EPS rank means that particular company's bottom-line earnings results are in the top 20% of the more than 7000 corporations being measured. Relative strength measures the cold, realistic auction marketplace's apraisal of a stock, in spite the theoretical value of the company or its past popularity, name, and image. How did the stock's price behave in market last year? Its running 12 months' performance is updated daily, compared to all other stocks, and then placed on the same easy-to-use 1 to 99 scale. An 80 relative strength rank means the stock, pricewise, outperformed 80% of all other common stocks in the last year. During good markets, the potential implication of these two basic news measurements, EPS rank and relative strength rank, is considerable. During poor markets, relative strength measures that break below 70 might forewarn you of posible problem situations. Every stock's group strength is shown each Monday. Investor's Business Daily shows a list atthe end of the NYSE tables of stocks that just fell below 70, 50, or 30 in relative price strength. These are generally companies to avoid. Most of the superior stocks available for investment will usually rank 80 or higher on both EPS and Relative Strength. Since one is a fundamentalmeasurement and the other is a marketplace valuation, insisting on both numbers being strong should, in positive markets, improve your selection proces compared to the old, unscientific methods of faulty opinions, academic theories, stories, promotions, tips, and touts. Of course, there is rio guarante that a company's terific past or current record can't suddenly start to turn sour. That's why you should always have and use some type of loss-cutting strategy. |
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