Investors Business Daily

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Investors Business Daily

• December 17, 2005
• Karl Eser

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Disclaimer

• This information is FYI
• Read the referenced materials and do your own
  research before investing
• No claim is made with regard to future investment
  performance using this or any other investment
  strategy
• CAN SLIM and other terms and concepts discussed
  in this presentation are proprietary and/or
  copywrited by IBD and its parent company

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A Simple Approach to Buying Stocks

• Bill ONeils approach
• identify companies with strong fundamentals
  large sales and earnings increases resulting from
  unique products or services and then buy their
  stocks when they emerge from price consolidation
  periods and before the run up dramatically in
  price
• How to Make Money in Stocks, William J. ONeil

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C A N S L I M

• Current Quarterly Earnings
• Annual Earnings
• New Companies
• Supply and Demand
• Leadership vs. Laggards
• Institutional Leadership
• Market Direction

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Current Quarterly Earnings

• Companies that have at least 25 growth for the
  last 2 quarters
• Companies whose quarterly earnings are
  accelerating
• IBD
• EPS Ratings
• Earnings Section
• Stocks in the News

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Annual Earnings

• Companies that have at least 25 growth for the
  last 3 5 years
• Sales Growth
• Margins
• Return on Equity
• IBD
• EPS Ratings
• Earnings Section
• SMR Rating

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New Companies

• New companies with
• New products
• New services
• New conditions in the market
• New management
• New companies that dramatically change the way we
  
• Live
• Work
• Do Business
• IBD
• The New America
• Internet Technology

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Supply and Demand

• Companies whose stock has significant increases
  in volume
• Measured in change over average
• IBD
• Volume Change
• Accumulation / Distribution Rating
• Stocks on the Move

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Leaders vs. Laggards

• Companies whose stock is among the top stocks
• Fundamentally
• Technically
• Companies who are in the in the best performing
  sectors and industry groups
• IBD
• IBDs Top 10
• IBD SmartSelect Corporate Ratings
• Relative Strength Rating
• Industry Group Strength

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Institutional Sponsorship

• Companies whose stock is being purchased by large
  institutional investors who represent
• Big money
• Smart money
• IBD
• Top New Buys and New Sells of the Top Rated
  Mutual Funds
• Accumulation / Distribution Rating
• Volume Change
• Stocks on the Move

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Market Direction

• What direction is the general market headed
• Confirmed uptrend
• Weak market
• Correction
• Much of a stocks success is due to the market
  conditions
• IBD
• The Big Picture
• Market Pulse
• General Market Sectors
• IBDs 197 Industry Groups

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Chart Patterns

• Bill ONeil identified chart patterns typical of
  hundreds of the biggest gainers over several
  decades
• IBD publishes graphical charts to help the reader
  identify stocks that are showing the same
  patterns
• Extensive educational materials in IBD regarding
  using charts for buying and selling

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Chart Patterns

• The IBD provides insights into identifying stocks
  exhibiting these chart patterns
• Cup with Handle
• Saucer with Handle
• Double Bottom Base
• Ascending base
• Flat Base

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IBD a comprehensive investment system

• Favors growth stocks over value stocks
• Combines fundamental and technical analysis
• Helps the reader target companies that meet the
  criteria of the CANSLIM method
• Helps the reader identify chart patterns that may
  indicate a stock is ready to break out
• Recommends a disciplined process for buying and
  selling stocks

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Daily Section A Features
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Daily Section B Features
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10 Minute Attack Plan

• IBD 100
• The Big Picture and Market Pulse
• General Markets Sectors
• Industry Groups
• The New America
• Stocks on the Move
• Stocks in the News
• Top Buys and Sells of the Top Mutual Funds

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IBD 100

• Monday special edition
• Features the top 100 stocks based on IBD
  proprietary criteria with a thumbnail chart of
  each with comments
• A good way to identify strong stocks
• Computer generate list is only a starting for for
  research

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The Big Picture and Market Pulse

• The Big Picture
• General discussion of the market action from the
  prior day
• Focused discussion of selected stocks
• General advice about positioning your portfolio
• Market Pulse
• Prior days action
• Current Outlook ex., market in confirmed rally
• Distribution days
• Leaders up in volume
• Leaders down in volume

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General Markets and Sectors

• Contains a one-year chart of the
• IBD New America Index
• NYSE
• NASDAQ
• Down Jones Industrials
• Psychological market indicators
• Analysis of market movements
• Most stocks follow the markets trend

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Industry Groups

• Lists all of the 197 IBD industry groups
• Ranked based on relative performance by
• Current week rank
• Prior week
• One month ago
• Listing of 52 week highs by group
• List of groups with the highest of stocks
  making new highs
• Charts the sectors with best performance

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The New America

• A daily feature in IBD
• Features a company that embodies the concepts of
  the N in CANSLIM
• Feature companies have new and innovative
  products or services
• Tracks the IBD New America index which has beat
  the SP 500

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Stocks On the Move

• Listing of stocks with largest percentage
  increases in trading volume compares to their
  50-day average
• More relevant than traditional lists of stocks
  based on absolute trade volumes such as Lucent,
  GE
• Stocks over 20
• IBDs computers pick up stocks of the more
  innovative, entrepreneurial companies typically
  overlooked in similar lists
• Stocks with 80 in both EPS and Relative Price
  Strength ratings are bolded
• Used to be called Where the Big Moneys Flowing

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Stocks in the News

• NYSE page
• NASDQ page
• Graphic displays of stocks over 12 hitting or
  near new highs
• Stocks over 15 with greatest volume increase and
  up 50 cents
• Discussion of two stocks from each exchange

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Top Buys and Sells of the Top Mutual Funds

• Contains analysis of the one or two top rated
  mutual funds and their recent buys and recent
  sells
• Indicates sponsorship by the big institutions

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IBD Stock Tables

• IBD Proprietary Ratings
• 52 Wk High
• Stock Symbol
• Close Price
• Change in Price
• Dividend
• Volume Change vs. Average
• Volume
• PE (Monday, Wednesday, Friday)
• Sponsorship Rating (Tuesday)
• Dividend Yield (Thursday)

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IBD Proprietary Ratings

• Unique to the CAN SLIM method
• Measures the fundamental strength of the
  underlying company compared to the overall market
  as well as the equity
• IBD indicators
• SmartSelect Composite Rating (percentile)
• Earnings per Share Rating (percentile)
• Relative Price Strength (percentile)
• Industry Group Strength (rated A E)
• Sales Profit Margins ROE (rated A E)
• Accumulation Distribution (rated A E)

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IBDs 10 Secrets to Success

• How you think is everything
• Decide upon your true dreams and goals
• Take action
• Never stop learning
• Be persistent and work hard
• Learn to analyze details
• Focus your time and money
• Dont be afraid to innovate be different
• Deal and communicate with people effectively
• Be honest and dependable take responsibility

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IBDs 20 Rules for Investment Success

• Consider buying stocks with each of the last
  years earnings up 25, return on equity of 17
  and recent earnings and sales accelerating
• Recent quarterly earnings and sales should be up
  25 or more
• Avoid cheap stocks
• Learn to use charts to see sound bases and exact
  buy points
• Cut every loss when its 8 below your cost
• Follow selling rules on when to sell and take
  profits on the way up
• Buy when the indexes are in an uptrend
• Read IBDs Investors Corner and Big Picture
• Buy stocks with a Composite Rating of 90 or more
  and a relative Price Strength Rating of 85 or
  higher in the IBD SmartSelect Corporate ratings
• Pick companies with management ownership of stock

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IBDs 20 Rules for Investment Success

• Buy mostly in the top six broad industry sectors
  in IBDs New High List
• Select stocks with increasing institutional
  sponsorship in recent quarters
• Current quarterly after tax profit margins should
  be improving, near their peak, and among the best
  in the stocks industry
• Dont buy because of dividends or P-E ratios
• Pick companies with a superior new product or
  service
• Invest mainly in entrepreneurial New American
  companies
• Check into companies buying back 5 to 10 of
  their stock and those with new management
• Dont try to bottom guess or buy on the way down
• Find out if the market currently favors big-cap
  or small-cap stocks
• Do a post-analysis of all of your buys and sells

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Investors Business Daily

• Published Monday - Friday (Mondays Special IBD
  100 edition is delivered on Saturday)
• Newsstand price 1.25 / Monday 2.00
• Delivered to your door in Anne Arundel County by
  730am - 295/year
• Electronic version available by the end of the
  day - 235/year
• Two week free trial subscription available
• Call 1-800-831-2525 or investors.com
• Published by William ONeill

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Additional Resources

• How to Make Money in Stocks, 3rd editionWilliam
  J. ONeil
• The Successful Investor - What 80 Million People
  Need to Know to Invest Profitably and Avoid Big
  Losses William J. ONeil
• 24 Essential Lessons for Investment Success
  William J. ONeil
• IBD Meetups monthly discussion of charts
  patterns with other IBD users

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Additional Resources

• Investors.com the IBD website
• Subscribers have access to IBDs on-line
  resources
• IBD Learning Center / Ask Bill ONeil
• Quotes / news / charts / watch lists - for your
  stocks
• Stock Checkup
• Focused screens to identify potential winning
  stocks

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Additional Resources

• IBD Training Courses
• Essential Strategies Techniques for Successful
  Trading (179) DC on 4/18/06
• How to Maximize Returns Using Charts
  Fundamental Research (795) DC on 9/9/06
• How to Master Charts Manage Your Portfolio
  (2,995)
• CAN SLIM Certification program (6,995)

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Final Comments

• If the IBD had a crossword puzzle and Dilbert it
  would be the only newspaper you need

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Investors Business Daily

• Presented byKarl EserVP AAII Baltimore
  Subchapter
• THE END
• HAPPY HOLIDAYS!

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Saturday, January 21, 2005
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