We'd all like to know the secrets for buying winning stocks. Here's the first one: there is no secret. No one formula and certainly no one data point is THE answer to finding the next hot stock. That isn't how investing works. But there are certain numbers that will help increase the odds of finding a stock that may go up. Here are some that will help.

Earnings. In real estate, the three most important words are location, location, location. In successful stock investing, they are earnings, earnings, earnings. Ultimately, all investing comes down to earnings. Earnings are what investors own. They contribute to Book Value (see below). They are the reason anyone invests in a stock: to reap the future rewards of a successful company. Earnings growth is what an investor wants to see. The stronger the better. Companies increasing earnings by more than 10% each year for the last three years have been exceptional as the economy has diminished. Look for companies that can grow earnings well above average no matter what the economy does.

Continue reading Comfort Zone Investing: Four Powerful Numbers for Picking Stock Winners

Comfort Zone Investing: Four Powerful Numbers for Picking Stock Winners originally appeared on BloggingStocks on Sat, 13 Mar 2010 10:30:00 EST. Please see our terms for use of feeds.

Many stocks have rallied significantly over the last year. In fact, if you bought almost any stock on March 9, 2009, you would have made a great deal of money. That was the low point for almost all stocks as the market gave in for its final capitulation and beat most of us over the head one last time with the heaviest frying pan it could find.

Stocks like Beazer Homes (BZH) and Ford (F) were selling for 24 cents and $1.65 last year. Other great bargains (in hindsight) were everywhere. It was as if the tree of stocks had been hit by a great gust of wind and all its fruit was lying on the ground. Everywhere you looked there were stocks selling for unbelievable prices. Of course, everywhere else you looked there was doom and gloom, ever increasing arguments that screamed "sell," not "buy." The world was definitely ending; capitalism was dead; there was no hope.

Continue reading Comfort Zone Investing: When to Sell a Stock

Comfort Zone Investing: When to Sell a Stock originally appeared on BloggingStocks on Sat, 06 Mar 2010 10:00:00 EST. Please see our terms for use of feeds.

Let's see now. Consumers are more pessimistic this month than last month. The Dow Jones Industrial Average loses 100 points on the news. Unemployment is better in one month, worse in another. The DJIA goes up on the good news, down on the bad. Home Depot has a good quarter, raises its dividend, and forecasts a better year for 2010. The stock goes up 50 cents on a day when the market is down 100 points. Other stocks are light on revenues. They go down 10% or more.

The market always sends mixed messages. There has never been a time when all the news is good. That's impossible. If all the news is all good, it means the economy is really thriving. Then investors worry about things being too strong, afraid that inflation will come back, so they sell stocks. When things seem totally awful (see 2008 and 2009 as examples), some investors see nothing but upside potential (see Warren Buffett and General Electric (GE) purchases), and they buy stocks. Most of the time, however, the news is good and bad. There is never a straight upward or downward line for the DJIA or for any stock for a long period of time unless the stock goes out of business, then the line is flat.

Continue reading Comfort Zone Investing: Keeping Cool with the Market's Mixed Messages

Comfort Zone Investing: Keeping Cool with the Market's Mixed Messages originally appeared on BloggingStocks on Sat, 27 Feb 2010 10:30:00 EST. Please see our terms for use of feeds.

If investing were only about numbers, then the math Ph.D.s would have all the money. But they don't. While numbers are very important and provide the majority of an investment decision, other elements come into play that are critical to any stock's success. They're hard to find sometimes but always worth the effort.

If you can discover these elements in a stock and great numbers, too, you've got all the odds for investing success in your favor.

The number one, most important piece of the investing puzzle is management. Management is everything. It's where all ideas begin and execution of them is implemented. Management can turn around a bad company and make it great. Management can take a good idea and turn it into a successful business.

Continue reading Comfort Zone Investing: Successful Stocks -- More Than Numbers

Comfort Zone Investing: Successful Stocks -- More Than Numbers originally appeared on BloggingStocks on Sat, 20 Feb 2010 10:30:00 EST. Please see our terms for use of feeds.

Inflation. The Federal Reserve Chief and the governors believe it to be the worst of all possible scourges for the U.S. economy. The specter of it looms large as the government throws more and more money at problems like unemployment, mortgages, and bank bailouts. It would seem inflation is inevitable as that money sloshes around in the economy, driving up prices for fewer goods as manufacturers slow or stop production due to lack of demand. So what's an investor to do?

Continue reading Comfort Zone Investing: Investing Options If You're Worried About Inflation

Comfort Zone Investing: Investing Options If You're Worried About Inflation originally appeared on BloggingStocks on Sat, 13 Feb 2010 10:30:00 EST. Please see our terms for use of feeds.

A rose is a rose is a rose. Thank you Gertrude Stein for that observation. But a bank is not a bank is not a bank. That's because not all banks are serving the same market, nor are they all offering the same loans. If you're going to invest in banks, be sure you understand who they're lending to and what kind of loans they have on the books.

The first group of banks is community banks. As you might guess, they serve specific communities, usually within a fairly narrow geographic region. They rely on that region for their deposits with which they'll make loans, and loan demand. In other words, they serve a well-defined community. They know all the neighbors, participate in the local activities, have a high profile, hopefully do good things for a community.

Continue reading Comfort Zone Investing: Not All Banks Are Equal

Comfort Zone Investing: Not All Banks Are Equal originally appeared on BloggingStocks on Sat, 30 Jan 2010 10:30:00 EST. Please see our terms for use of feeds.

Last week I wrote about five things to fear in the stock market, going from the price of gold and what it portends to federal government programs and their consequences. This week, let's look at reasons to be positive about the stock market and what they might signal for 2010.

Employment is getting a little bit better. Nothing to get excited about yet, but still, the worst of unemployment seems to be in the past. Each month for the last six,, there have been fewer layoffs. The latest employment report showed that the service sector added 56,000 jobs while manufacturing was still losing them, though by a much smaller amount than in previous months.

Continue reading Comfort Zone Investing: Rational optimism

Comfort Zone Investing: Rational optimism originally appeared on BloggingStocks on Sat, 12 Dec 2009 10:30:00 EST. Please see our terms for use of feeds.

Apple Inc. (NASDAQ: AAPL) just reported unbelievably good earnings in an unbelievably bad economy. Fiscal fourth quarter results were up 46% compared to the same quarter last year. Investors liked what they saw and pushed the stock over $200 a share in after market trading. How can Apple deliver great earnings while almost everyone else is struggling?

Investors can learn a lot from studying Apple and applying it to all their stocks. While it is a high tech company, it has attributes that all great companies share. Here are some of them.

Continue reading Comfort Zone Investing: Apple shows how it's done

Comfort Zone Investing: Apple shows how it's done originally appeared on BloggingStocks on Sat, 24 Oct 2009 10:30:00 EST. Please see our terms for use of feeds.

There's a number almost synonymous with investing. It's the P/E ratio. That's Price to Earnings. It's only one number, but it's a powerful one, one that can tell an investor quite a bit about how other investors value a stock. Never buy a stock based on one number, but a good number to start with is the P/E.

The P/E is calculated just like it's spelled. Take the price of the stock (P) and divide it by the last full year's earnings (E). That's what's called the Trailing P/E. It's the most common P/E ratio, the one most investors ask about when they inquire: "What's the P/E?" of a stock.

A second P/E is the Forward P/E. It's the one that uses the projected earnings for next year as the denominator. If analysts are right in their projections for a stock's earnings, this P/E will give you a reading as to the "cost" of buying a stock based on future results.

Continue reading Comfort Zone Investing: The power of one number - the P/E ratio

Comfort Zone Investing: The power of one number - the P/E ratio originally appeared on BloggingStocks on Sat, 18 Jul 2009 10:30:00 EST. Please see our terms for use of feeds.

Continue reading Comfort Zone Investing: The glass isn't half empty -- it's half full

Comfort Zone Investing: The glass isn't half empty -- it's half full originally appeared on BloggingStocks on Sat, 11 Jul 2009 10:30:00 EST. Please see our terms for use of feeds.

The stock market, as measured by the Dow Jones Industrial Average, sharply rebounded from its low of 6440 in March of this year. Currently, as this is written, the notable index is hovering around 8400. That's an increase of 30%. Not bad for two months of trading. While the average is made up of only 30 stocks, those 30 stocks are some of the best. There are also some real losers, such as General Motors (NYSE: GM) and Citigroup (NYSE: C). But for the most part, the index contains the strongest industries with some of the strongest stocks. With that kind of recovery already in place, is it too late to buy stocks or is this just the start of a major rally?

Continue reading Comfort Zone Investing: Is it too late ... or too early to buy stocks?

Comfort Zone Investing: Is it too late ... or too early to buy stocks? originally appeared on BloggingStocks on Sat, 16 May 2009 10:30:00 EST. Please see our terms for use of feeds.

There are always a lot of emotions involved with investing. Most of the time they're fear or greed. Recently it's been outright terror. That's because large amounts of money have been lost. Most indexes for stocks were down between 40% and 50% in 2008.

In the month of March, we saw a very nice rally. There's Spring and hope in the air. But here's the reality: the market is still down 13.3% for the quarter, its sixth straight quarter of losses. The Dow last fell in six consecutive quarters in the period ending on June 30, 1970. It was the worst first quarter in percentage terms since 1939, when the average fell 14.81%. One robin does not make Spring. One month does not make a rally.

Continue reading Comfort Zone Investing: Market realities

Comfort Zone Investing: Market realities originally appeared on BloggingStocks on Sat, 04 Apr 2009 10:30:00 EST. Please see our terms for use of feeds.

Bank stocks are well off their bottoms. Bank Of America (NYSE: BAC) traded at $2.53 on Feb. 20 of this year. Now it's $7.90 as I check the latest quote. Wells Fargo & Co. (NYSE: WFC) was down to $7.80 on March 5. You'll have to pay $17 as of this writing. JPMorgan Chase (NYSE: JPM) touched $14.96 before bouncing to $28. And Citigroup (NYSE: C) (hopefully) bottomed at $.97 on March 5, then ran to $3 as I write this. Is it finally time to start buying bank stocks?

Continue reading Comfort Zone Investing: Time to buy bank stocks?

Comfort Zone Investing: Time to buy bank stocks? originally appeared on BloggingStocks on Sat, 28 Mar 2009 10:30:00 EST. Please see our terms for use of feeds.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

General Electric Company (NYSE: GE) at $8.75. Citigroup, Inc. (NYSE: C) at $1.40. Bank of America Corporation (NYSE: BAC) at $4.75. General Motors Corporation (NYSE: GM) at $1.90. Ford Motor Company (NYSE: F) at $1.75. These numbers don't seem possible, but they are. If you're tempted to buy any of them or many other big names (like American International Group, Inc. (NYSE: AIG) or Ambac or Beazer Homes (NYSE: BZH)) that seem to be selling for prices never imagined, here's some advice: Know that you don't know enough to make an intelligent investment decision.

Continue reading Comfort Zone Investing: Are these stocks bargains?

Comfort Zone Investing: Are these stocks bargains? originally appeared on BloggingStocks on Sat, 14 Mar 2009 10:30:00 EST. Please see our terms for use of feeds.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

Lately I've looked in vain for good news. I mean news that has some substance, that would make a real difference to an investor. I can't find any. In fact, I feel like a pinball, bouncing from one rubber post to another, each one accelerating the downward, inevitable path toward the black hole at the bottom of the board.

Continue reading Comfort Zone Investing: That pinball feeling

Comfort Zone Investing: That pinball feeling originally appeared on BloggingStocks on Sat, 21 Feb 2009 10:30:00 EST. Please see our terms for use of feeds.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

TARP stands for Troubled Asset Relief Program. You may have heard about it, how $194.2 billion has already been given out by the agency to 317 institutions in 43 states and Puerto Rico. The Treasury is in charge and estimates that 25% of about 8,000 banks may apply for funds. But not all of them will take it. What should investors think about a bank they own that qualifies but doesn't take the money?

Continue reading Comfort Zone Investing: Why some good banks won't take TARP money

Comfort Zone Investing: Why some good banks won't take TARP money originally appeared on BloggingStocks on Sat, 07 Feb 2009 10:30:00 EST. Please see our terms for use of feeds.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

Two emotions run the stock market: fear and greed. We've seen greed hit its apex in the late 90's when some stocks with profits were selling at more than 100 times their earnings per share. Others had no earnings at all but lots of "eyeballs" (a new metric for dot com stocks). Unfortunately those eyeballs never got monetized, and many of those wonder stocks are names long forgotten. In hindsight, it's easy to ask: why would anybody buy those stocks?

Continue reading Comfort Zone Investing: Should you even be buying stocks?

Comfort Zone Investing: Should you even be buying stocks? originally appeared on BloggingStocks on Sat, 31 Jan 2009 10:30:00 EST. Please see our terms for use of feeds.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

Warren Buffett said that the two rules of investing are: #1: Don't lose money, and #2: Don't forget rule number one.

Continue reading Comfort Zone Investing: The new rule of investing

Comfort Zone Investing: The new rule of investing originally appeared on BloggingStocks on Sat, 24 Jan 2009 10:30:00 EST. Please see our terms for use of feeds.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

Several responses to my columns on 2009 expectations and how to invest for the year have been totally negative. They claim I'm too optimistic. The only way to survive is to buy gold. America is finished. The new administration is socialism. The American capitalist system is done. These readers are not students of history.

America is built on hopes and dreams, fueled by Darwinian survivors of other countries with enough energy and nerve to come to a land of freedom where their dreams can become real. We have been peopled by brave and strong immigrants who gave up everything to have the chance for a better life for themselves and their children.

Continue reading Comfort Zone Investing: Hey! This is America

Comfort Zone Investing: Hey! This is America originally appeared on BloggingStocks on Sat, 03 Jan 2009 10:30:00 EST. Please see our terms for use of feeds.

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

For a better investing year in 2009, think about championship basketball. Winners at every level have one thing in common: defense. It's defense that wins rings. And this year, in the stock market, defense will keep you alive. It will be the kind of year where making a little money makes you a winner. Think defensively until there are clear signs that the economy is improving.

First, keep your expectations low. No one knows when the current economic cycle will end and begin to heal. What we do know is that all indicators keep going lower: housing starts, employment, consumer spending, housing prices. While the market discounts good news well in advance (some 6 to 9 months ahead of the real numbers), there's no indication from any front that better days are ahead. We know the new administration will spend money to create jobs so more spending power will be in the economy. We know there will most likely be tax breaks for companies to encourage production and hiring. But none of that is in place. Investors have to wait and see how and if these develop and what effect they will have on the economy and on stocks. It might take all year. Or longer. If it does, the stock market won't be doing too much.

Continue reading Comfort Zone Investing: Six smart ideas for stocks in 2009

Comfort Zone Investing: Six smart ideas for stocks in 2009 originally appeared on BloggingStocks on Sat, 27 Dec 2008 10:30:00 EST. Please see our terms for use of feeds.