Investors Business Daily Review

Infamous investor Jesse Livermore said that "all you needs to know to make money( in the stock market) is to appraise (the general) conditions." What he is saying is that you can be right about everything with a stock but if you're wrong about the general market, and that direction is down, three out of four of your stocks plummet and you will lose big money. It's like swimming against the current. The wise investor evaluates the general conditions (which way the current is going) and invests along with it. IBD seizes on this reality and gives multiple sources of data for the investor to appraise the general conditions of the market.
Two of these tools are right on the first page. Listed on top of the first page is the price and volume activity of all the major indexes for the previous days trading. They're highlighted in blue for up and red for down so you can quickly see where the market moved the previous day. The second thing on the first page is the big picture column. This is a synopsis of all the day's activity and commentary on its relationship to longer term trends. Regardless of how busy I am at check the price and volume activity and read the big picture column everyday so I can keep a pulse on the market.
IBD also has a great page called how is the market. This presents charts for the key market indexes, the NYSE composite, NASDAQ, S&P 500 and the Dow Jones industrial. They show you the price and volume activity as well as relatives strength lines, moving average lines and other great market metrics. It is a great tool for identifying trends in the general market.

Sign up for Investors Quotes Daily a free daily quote from investor William J. O'Neil. A great way to learn from the best and stay encouraged in your pursuit of being a successful investor.

SIGN UP FOR FREE HERE

The second feature that stands out in IBD is their stock tables. Most stock tables show only price and volume activity of stocks and sort them alphabetically. IBD goes way beyond this and give you a powerful tool for finding great emerging stocks. First they are sorted into their respective sector and then the sectors are sorted by their strength. For example currently the medical sector is performing the best so those stocks are shown first. Seasoned investors value this because they know how key is to focus their stock portfolio on stocks in the best performing sectors. After doing extensive historical research on the stock market O'Neil discovered that "since 1953, the majority of individual stocks that were real market leaders were also part of a leading industry group or sector at the time."
The second thing you'll notice about IBD's stock tables and the most important is that each stock includes IBD's five proprietary ratings called the Smart Select Corporate ratings. Let's talk about each one of these powerful ratings.
- Earnings-per-Share Rating: This calculates the growth ability of the company's earnings over the last three years giving additional weight to the most recent quarters. This gives you a great tool for quickly evaluating a companies profitability which is the driving force behind a stocks price movement over the long term.
- Relative Price Strength Rating: This measures a stock's price performance over the previous 12 months and compares it all other publicly traded companies. This is a powerful tool to help you pick out the top stock amongst a group you are comparing.
- Sales + profit margin + return on equity (SMR) rating: This rating combines these fundamental factors into a single rating to measure a company's sales growth and profitability. You want to pick companies who are growing in their core area of business (measured by sales) and who are profiting from them. This rating helps you gauge that.
- Accumulation/distribution rating: This rating is based on daily price and volume changes and tells you whether a stock is being accumulated or distributed. Knowing this is key to determining supply and demand for a stock and from their determining its future price movement. If you're not familiar with accumulation and distribution see my article on trading volume for a great explanation.
- Composite rating: This is the first column in the stock tables and it combines all of the ratings to give you a summary rating for a quick review of a stocks overall performance. This is a great rating for comparing stocks in the same industry group. It's also a quick way to determine whether to look further into the stock or not.
Another great thing about the stock tables includes a percentage change in volume column. This gives the days volume change as a percentage of the 50 day average volume. This figure is key to determining which stocks are in demand in the market. Almost every day I look through the stock tables looking for big changes in volume. If something makes big moves I check to ratings to determine whether to investigate further. Through this method I have found many great stocks before they broke out.

Get 4 weeks of IBD free when you subscribe to the digital edition

IBD subscribers have access to this great online tool. This is a summary of all of the criteria in William J. O'Neil's CANSLIM investing (if you're not familiar with this see my article on picking stocks with CANSLIM). It gives you all of the stocks Smart Select Corporate ratings as well as further data in each of the ratings areas. When I'm researching a stock I first look at its chart on investors.com to see its price and volume trends. From there I can jump right to the Stock Check Up tool to see it's ratings to and get a quick but thorough analysis of its fundamentals. I can also see how it rates against the other companies in its sector. Often this information is enough for me to make a successful buy on. I don't have to spend hours of time looking through the stock's quarterly and annual reports to see if it's worthwhile. This is a huge timesaver. The amount of research someone may take hours to do what I can get done in minutes.

This was just a few of the features available in IBD. Not only does it save you time on research but it gives you tools to make more profitable trades which will easily pay for the cost of the paper. I paid for the cost of my annual subscription in the first month trading with it. If you are a nonprofessional investor who wants to get above average results but don't want to spend all day doing research IBD is for you.

CLICK HERE TO SUBSCRIBE

- To subscribe to the digital version of IBD click here.
- To subscribe to the print version of IBD click here.
- For more information on successfully investing using IBD read William J. O'Neil's book How to Make Money in Stocks.
- If you like William J. O'Neil sign-up for Investors Quotes Daily. They send out a free daily quote from William J. O'Neil. Sometimes it's one of his investing strategies and other times a piece of sage wisdom but it's always a great piece of knowledge on being successful in investing.