Where We Get Our Ideas... and
How We Follow 'em
By Dr. Steve Sjuggerud
December 22, 2007
"So... where do you come up with your investment ideas?"
I never have a good answer for this question. I'm not sure what people are even looking to hear...
My Magic 8-Ball? A secret website? A guy on the inside at a big hedge fund? Those things would all fail you sooner than later.
The truth is, I read a lot, looking for a little tiny nugget of something... a little road to go down and research. And then I dig...
When I'm on the trail of something new, whether it's Icelandic bonds, rare coins, timberland in Argentina, or something a little more straight-ahead, I don't have a specific process... I simply learn as much as I can, and then I get on a plane and go talk to the experts.
But that doesn't answer where the idea comes from in the first place... My investment ideas simply come from reading and thinking actively about what I read, trying to find an investment angle.
Today, in our final regular edition of 2007, I thought I'd share with you where I get my ideas and how I follow them. I'll stick with things that are either free or very inexpensive, so you can use them and get your money's worth out of them. (We have outrageously expensive tools at our fingertips in the office... including Thomson Datastream and a Bloomberg Terminal... but at home you don't need these.)
I know that, when I don't have any good investment ideas, it simply means that I'm not up on my reading. Reading is cheap. Here's what I read:
Investor news: No surprises here... I read the Financial Times (www.ft.com, the world's best financial newspaper), I thumb through The Wall Street Journal (www.wsj.com), and Bloomberg. Most everything here is free online. If I could read just one financial magazine each month, it would be the Economist. I also like Barron's, Forbes, Fortune, and one you probably haven't read, but should: Bloomberg Markets.
Stock charts: For quick stock charts, we actually use www.stockcharts.com and www.yahoofinance.com. We have the fancy tools, but these freebies are quick. We use stockcharts.com for most of the charts in DailyWealth. This site offers a ton of technical indicators, if you're into them. Also, we've been using a beta version of www.xlcharts.com for more complicated charting.
Stock Data: To quickly look up price history for a stock and balance-sheet information, once again, we use Yahoo. Ten years ago, this info would have cost you tens of thousands of dollars a year. I probably use Yahoo Finance more than any other site. Sometimes, you've got to double-check the balance sheet data though.
When I'm doing detailed historical research, I'll use the Federal Reserve Bank of St. Louis' website http://stlouisfed.org/default.cfm. If it's not there for free, it's probably at www.globalfindata.com for a reasonable cost.
Precious metals: For precious metals investors, www.kitco.com provides the most detailed news and commentary on gold and silver. It occasionally features essays by your DailyWealth editors as well. My colleague Matt Badiali writes a great precious metals advisory called the S&A Prospector. Casey Research and John Doody's Gold Stock Analyst also do excellent work on metals and mining stock analysis.
ETFs: For information on exchange-traded funds, I use www.etfconnect.com. It's the most comprehensive free ETF database out there. You can use its "Fund Sorter" to search for just about any kind of ETF.
Foreign stocks: To look up foreign stocks, you can use www.adr.com. ADR stands for "American Depository Receipt." They are simply foreign stocks traded on the U.S. exchange. This site also has nice search function. For instance, let's say you want to invest in Argentina. You can use its screen to find every Argentine stock traded here in the States.
Independent stock research: There's an incredible amount of independent research out there. Of course, I'm biased toward my publisher, Stansberry & Associates Investment Research. I can only tell you that if Stansberry wasn't my publisher, I would still subscribe to its publications. Morningstar and Value Line are also worth the price.
Trailing stop services: Tracking your stops can be a pain... but I've found two excellent ways to keep track of them – TradeStops and XLQ.
www.tradestops.com was actually started by a True Wealth subscriber with a Ph.D. in math, Richard Smith. It's a simple, web-based way to track your stops. It sends you an e-mail when one of your stops is hit. Couldn't get much easier. You ought to give it a try.
XLQ is a full-blown Excel interface that automatically brings stock quotes and company data into an excel spreadsheet for you. With XLQCompanion, you can easily track your stops. It is free to try for 45 days. Visit www.qmatix.com for details. Leo, the creator of QMatix, is very helpful. Both Richard and Leo do a great job.
That's a lot to keep you busy next year, and a lot of things to check out. The Internet revolution has given us an absolutely amazing amount of free (or inexpensive) stuff to help us with our investments.
But keep in mind... you certainly don't need all of this stuff to be a successful investor next year. I use it all because I love to do research and write about great investments to my readers.
I hope you'll stick around and read DailyWealth to learn what we find in 2008.
Good investing,
Steve
P.S. Just a reminder... beginning on Monday, December 24, DailyWealth's publisher Stansberry & Associates will feature the Twelve Days of Christmas in place of your regular DailyWealth edition. We will return to our normal format on January 7. We think you'll enjoy this special holiday series. Look for it on Monday.
Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
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