It only takes a second to trade, the research is the time consuming bit. Hence you do have to be interested in business and investing otherwise you’ll skimp your research and the trading will take you to oblivion.
I’m a big fan of Investors Chronicle, you have to pay a subscription but it’s not expensive and gives you all the data and many investment ideas.
The Watch List
There are many on line versions of this but my main heavy duty watch list is held on an excel spreadsheet so I can have complete flexibility and control of it.
I have this organised at two levels. The sector I’m interested in and why. Within that is the companies within that sector competing for my investment. For each I’ll keep a potential buy price, the good points which would make me buy, the threats which would make me not buy, a mark out of 10 of how “hot” they are.
I also track Dividend yield, P/E, Director dealings, the analyst forecast all as detailed below.
I’ll maintain a smaller version of the very hot tickets on an on line version, I use the Investors Chronicle portfolio manager here
Through this you can automatically track the movements to help comparison and decide on a buy.
Share Price History
For this I would use Google Finance here
It gives you a great view for any period you like as far back in time as you need and will tell you the exact price on any given day.
In these days of almost zero interest it’s useful to see what return you may get on your capital investment compared to practically nothing in the bank.
The dividend yield is what you need which I get from Investors Chronicle here
It will also tell you when the shares go ex dividend (i.e. when you have to buy them by to get the dividend) and when the dividend is actually paid.
Gives a view on how risky the shares are i.e. low means the big fund managers don’t fancy it and it will plod along. High means there will be high expectations from the Fund Managers over future profit and hence quite volatile if there is a hint that profit targets won’t be met. Generally the higher the P/E the higher the volatility
Big Investor sentiment
Prices are really driven by the big fund managers and their large investments. You can see for example here
a consensus around investment analyst views.
In this example for Lloyds Bank it showed:
I would for example translate that into the fact the big fund managers who drive the prices are looking to at least hold and potentially buy. Hence given favourable events they will be in quick to push the price up. So that would be a positive indicator in the overall assessment.
The Private Investor
There is nothing you or I can do to influence the share price against the professionals. But that does not mean that you can’t exchange information with other private investors. On line message boards for companies are a great source of information and sentiment. You might often get a friend of a friend employed in a company giving a view or current employee’s discussing situations or people reporting on local impacts of company actions e.g. Tesco are stocking Hovis bread again. For this I use Interactive Investor discussion boards you can find here
These are a great source of information, you’ll find me engaging under MrBroke 🙂
Private Investor World Videos
As private investors we don’t get much opportunity to go and visit companies or get presentations from businesses.
You can see Private Investor World here.
It’s a site built to help Private Investors get close to companies and their management. They provide videos of investor presentations by management, interviews with company management, company visits, education videos.
I particularly love the company presentations to groups of Private Investors they arrange like this one for Photo Me you can see here
It’s pretty easy to find who owns how many shares and how the Directors have been trading in the company they are running over the last 12 months. Make sure you are analysing actual trades rather than stock awards as part of their remuneration package.
Bid Offer Spread
You will get a quick view of this here
More relevant when thinking of buying but a large spread say 5% shows volatility and would also wipe out 5% of your investment at a stroke. That’s hard to make back in the short term.
Opportunities and threats
I like to make some notes on the factors for growth in one column and any threats to the share price in another. I find weighing up the pro’s and con’s of a sector and the particular company view quite helpful when the big buy/sell decision is required.
Doing the Deal
At the end of all that I’ll score each company out of 10, put the top four or five on my on line portfolio and track them closely for a while. When the score gets to a perfect 10, the timings right and I can raise some cash I’ll buy.
You may raise the cash by selling some existing investment, well that’s called churning. The brokers love that. That can get expensive and lose you a lot of money. The dealers make their money on the transaction fee which is generally quite low, £10 or less. The brokers make their money on the bid/offer spread which is often dependent on supply. If for example everyone is buying and particularly for smaller AIM companies available stock is limited then there could be a wide amount between Bid and Offer. Just be aware that if there was 5% difference between Bid and Offer then you’ve just lost 5% of your hard earned money to the broker. That’s sometimes hard to claw back in the short term.
You can see the Bid and Offer spread if you look at a share price through Interactive Investor.
Daily Research Routine
This would be my ideal daily routine if I was at home:
7:00 am till 8:00 am (well you have to start early in investing
Switch on Bloomberg business news channel 502 on Sky in UK. To get a view on futures, how the markets are going to open at 8:00 am, gives a good view of the global sentiment which may impact your shares and they constantly interviewing key people of interest.
7:30 till 8:00 Catch up with the newspapers daily business news (with Bloomberg on in the background)
This would involve reading the business section of my Ipad app for the Daily Telegraph which arrives at 5am every morning
8:00 am till 8:15 am – Catch up with the Investors Chronicle on-line
Make sure I’ve read all their latest articles from the previous day on revised share tips, market news, market movements
8:15 am till 8:30 am – Director Dealings
You’ll find a daily log of all director deal transactions here
8:25 am till 8:30 am – Reviews
A quick review of my hot ticket automated watch list, that being any potential imminent buys or sells. Also a quick review of the excel spreadsheet heavy duty watch list and any additions or removals from there
You can do that in one hour each day before 8am and once the investments are checked out I’ll be off to the Sports news !