Five Steps to Successful Stock Investing

Our mission is to provide tools to help individuals, including both members of investment clubs and independent individuals, to become smarter investors. Our products are aimed at non-professional investors, providing high-quality yet easy-to-use tools that enable our customers to invest successfully in the stock market without spending thousands of dollars. By faithfully following these "Five Steps to Successful Stock Investing", using our services and web tools, you too can become a successful long-term investor. The following is an overview of our methodology and the tools that are available to fulfill each step.

By Doug Gerlach, ICLUBcentral, Inc.

1. Educate Yourself about the Stock Market

Who says you have to be a professional, or consult one, to consistently earn money in the stock market? Our Take Stock book guides through the investing jungle and dispel the myths about successful investing. Comprehensive yet easy to understand, Take Stock starts with the basics, everything from learning financial terminology to basic price evaluation. Learn how to make growth and value projections, and how to screen for stocks that are right for a particular portfolio goals. Learn how to evaluate company quality through "technamental" interpretation. Take Stock also explains in simple no-nonsense language the proper way to manage and diversify a portfolio.

Buy Take Stock.

2. Find Candidates to Study

Successful stock analysis begins with finding suitable candidates. It's highly unlikely (though not completely impossible, I suppose) that high-quality stocks can be found by listening to the talking heads on financial television programs, overhearing conversations at the country club, or soliciting "hot tips" from the brother-in-law. Instead, harness the power of a personal computer and the Internet and use stock screening tools to identify stock ideas that meet rigid tests of quality and value. For this purpose, we offer several options. MyStockProspector.com is the most powerful and comprehensive tool for long-term-based stock screening available online today. Users can search on more than 120 separate criteria, and beginners can use a selection of pre-defined criteria to get up and running quickly. Advanced users appreciate the ability to craft detailed search screens, customize reports, and export results. With no software to update or install, MyStockProspector.com is a great solution for finding stocks to study.

Try MyStockProspector.com
Go to MyStockProspector.com

Another resource that makes the process of finding quality companies even easier is the Stock Screener at our StockCentral.com website.. This search tool screens more than 7,700 companies using high-quality Morningstar data, quickly identifying stocks that meet personal requirements for consideration. The tool is built for ease-of-use, so you don't need a business degree in order to find interesting stocks. Whether looking for growth, quality, value or safety -- or some mix of those characteristics -- just choose from a simple but powerful selection of criteria to display stocks that match. (For a small sample of results from the screener, take a look at our screen of growth companies). StockCentral.com's Dividend and Real Estate Investment Trust (REIT) screeners offer additional search capabilities for those types of securities. Each week, we scour all public companies in order to identify those stocks that meet the highest standards of quality, and those that make the grade appear on our Roster of Quality Companies on the site. These stocks are good starting points for further analysis.

Go to StockCentral.com
Sign up for a StockCentral.com Trial.
See Our Stocks to Study List

3. Analyze Companies

We can point investors to several that cut through the chaff and focus on the most important elements of quality, value, and growth, and help them to quickly analyze a stock, whether a beginner or an old hand. The process of analyzing a stock starts with an understanding of what's important, and what's not when it comes to interpreting the massive amount of data and information that is available about any company. Take Stock™, available with a StockCentral subscription, is designed for beginning investors, and can teach the principles of investing in a matter of minutes. All you need is to be able to tell the difference between a straight line and a crooked one. A full-featured online application, Take Stock (which follows the precepts in our printed book of the same name), allows investors to analyze companies, save them to portfolios, and even display completed Stock Selection Guides (SSGs).

On StockCentral, our in-depth Company Reports are comprehensive ten-part reports with charts, table, analysis, estimates, peer comparisons, and much more. Subscribers navigate from section to section and thus gain important knowledge about many aspects of a company's business. Some report elements can be customized, such as changing the peer companies or selecting different date range. A "PDF" option is generated for each company in full-color and including all of the vital statisics, nicely formatted for further study and review.

Go to StockCentral.com
Sign up for a StockCentral.com Trial.

4. Compare to Peers

I like to assess the quality of a company and its management before making a decision about investing in its stock. Comparing a company's key ratios and values to those of its peers, competitors, and others in its industry group is a great way to identify well-run businesses. The averages for 146 industry groups are provided on StockCentral.com to help assess company performance in when analyzing a stock, including for pre-tax profit margins, return on equity, debt/equity ratio, and five-year growth rates, all weighted by revenues of constituent companies. These items can serve as a quick reference for comparing company growth to the industry growth average, helping to gauge how well a company's management is performing in relative terms. On StockCentral, subscribers drill down from Sector to constituent Industries to constituent Companies to individual Company Data Reports. Data tables are sortable by any column, offering a quick review of industries when searching for "best of the best" companies.

View the current Industry Averages here on ICLUB.com (for quick reference, without the additional functionality provided to StockCentral subscribers.Our StockCentral Ratio Analyzer, unique among online investment tools, is another handy resource. Comparative ratio analysis of data reported in a company's annual and quarterly reports helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and understand any risks of investing in it. Our tool suggests when changes to a company are good, bad, or show warning signs, through color-coded boxes and appropriate verbiage.

View Industry Averages
Go to StockCentral.com
Sign up for a StockCentral.com Trial.
Try MyStockProspector.com
Go to MyStockProspector.com

5. Keep Accurate Records and Manage Holdings

The Portfolio in our StockCentral.com website helps investors to keep accurate records about their current holdings and remain current on changes that might impact portfolio, including changes in valuation or potential fundamental problems. With this Portfolio tool, users can enter all investment transactions for stocks, bonds, mutual funds, or any other securities. Up-to-date reports are provided with the value of holdings. Separate portfolios can be established for separate brokerage and/or retirement accounts, or watch lists can be created to keep tabs on stocks of interest. By recording all transactions, users will have at their fingertips information about potential capital gains, capital losses, and income more informed decisions can be made, especially those that affect personal tax returns. Each investment transaction made in multiple portfolios can be tracked, or "Simple" portfolios can be created that are easy to maintain.

Even a long-term, buy-and-hold approach to the market doesn't eliminate the need to occasionally sell. Managing a portfolio requires regular attention -- which doesn't mean watching each tick during the trading day. Instead, focus on quarterly changes in profitability, the overall balance of a portfolio, stocks that become over-valued, and news that might be the early warning sign that it is time to sell. These Portfolio tools provide robust insights into holdings with a selection of reports, including diversification and fundamental reports, all designed to offer insights into the underlying performance of the owned companies.

For investment clubs, myICLUB.com includes a complete suite of portfolio reports that may be accessed by any member of a club. These include diversification reports and a PERT-style Portfolio Report that can spotlight potential problem points in holdings.

Go to StockCentral.com
Sign up for a StockCentral.com Trial.

Still Seems Like More Than You Can Handle?

Investing in stocks isn't for everyone. If you like what you see here, but are not sure that you have the time and energy required to become a successful individual investor, then take a look at the investing newsletters that we publish. The Investor Advisory Service has been published since 1973 and is aimed at investors who want to use time-tested methods of long-term stock investing, but don't want to do all the work! The Investor Advisory Service has been named longer than any other newsletter to the prestigious Hulbert Investment Newsletter Honor Roll in recognition of its long-term consistent success.

Our SmallCap Informer uses a similar approach but focuses on smaller companies and has outperformed the small-cap index regularly since it was founded in 2012. Finally, our Dividend Informer is a premium newsletter that seeks out stocks with a combination of income and long-term appreciation through companies with a track record of offering regular, increasing capital return in addition to potential for share price growth.

Learn more about Dividend Informer.
Subscribe to Dividend Informer.
Learn more about Investor Advisory Service.
Subscribe or Renew.
Learn more about SmallCap Informer.
Subscribe or Renew.

About Doug Gerlach

Doug Gerlach, President of ICLUBcentral, Inc., since 2005, is a nationally recognized expert on online investing and investment clubs. He is the author of five books, including The Complete Idiot's Guide to Online Investing and Investment Clubs for Dummies. He was a contributing editor for Mutual Funds Magazine, and wrote articles for Individual Investor, PC World and other publications. He has been featured in numerous programs and publications, including BusinessWeek, Individual Investor, Boston Globe, New York Times, Worth, CNNfn, and Yahoo! FinanceVision. Gerlach's website efforts have garnered accolades from Forbes, Barron's, Money Magazine, The Economist, US News & World Report, and Fortune. Doug is a popular speaker at Investors Fairs and workshops held across the country and around the world, from Honolulu to Berlin.