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Answer:
Dear BuyandHolder,
Number One. I would begin by reading “How the Stock Market Works” by John M. Dalton, published by Prentice Hall. It covers all the basics from dividends and capital gains to selling short and taking advantage of stock rights and warrants. The author also gives in-depth coverage about how brokerage firms operate and the role the various stock exchanges and over-the-counter markets play in the investor’s life.
Number Two. The classic in the field, of course is “Security Analysis” by Benjamin Graham and David L. Dodd. Initially published in 1934, it has been revised several times. The two economists were the first proponents of value investing… and tell you precisely how to judge an individual security. A firm believer in the Graham-Dodd approach today is Warren Buffett. May you do as well as he!
Number Three. Then, head for your library to look at “Value Line Investment Survey.” If you’ve been reading this column, you know that I continually recommend this independently published research tool. It follows more than 1,700 stocks within 99 industries.
The reports on each industry and the stocks within that industry are revised quarterly. They are written by independent security analysts – in other words, not by analysts working for brokerage firms or investment bankers.
Stocks are ranked (based on proprietary calculations) to predict their probable performance over the next 6 to 12 months: 1 to 5 for timeliness and 1 to 5 for safety.
The weekly “Value Line Summary & Index” is useful for making buy, hold and sell decisions. The Index has separate lists for (1) stocks that are ranked 1 or 2 in safety; (2) stocks that are regarded as very timely; (3) stocks that pay the highest dividends; (4) that have the best cash flow; and (5) that have the best 3- to 5-year price potential.
You can also run down a list of the last 13 weeks’ best and worst performing stocks as well as those with the lowest and highest P/Es.
Two additional lists are conservative stocks and bargain basement stocks.
Value Line has been in business for more than 75 years. It also has free online educational material at: www.valueline.com. Click on “Education” to find out about P/E ratios, debt levels and other financial data.
Number Four. For over 85 years, Standard & Poor’s has been publishing the popular weekly, “The Outlook,” which has research on individual stocks, special reports on the economy and articles on personal finance topics. I think you’ll find it particularly useful for monitoring your portfolio, using the “strong buy” or 5-star stock recommendations. Check with you library or go to: www.spoutlook.com.
Number Five. You included the word “tools” in your query, so I feel free to also suggest that you monitor the Dow – not necessarily what it does every day but rather when changes are made to the stocks it includes. In other words, when stocks in the Dow are dropped and replaced by new ones you should take this as a heads up.
For excellent information on all the Dow Jones indexes, go to: www.djindexes.com.
Good luck! |
