Analyze stocks as an active investor

Instructions

  1. Test before you invest.
    Open a testing account with fake money and track your results for at least a year to get a feel for how you would perform.
  2. Analyze the individual stocks thoroughly:
    Go through the following criteria:
    • Financial condition: Does the company have current assets of at least 1.5x current liabilities?
    • Earnings stability: Is there no deficit in the last five years covered in the Stock Guide?
    • Dividend record: Does the company have some current dividends?
    • Earnings growth: Do the company's earnings from the previous year exceed those from the previous five years?
    • Price: Is it less than 120% net tangible assets?
  3. Focus on low-multiplier stocks.
    Compare the multiplier to the industry average to determine if it is low.
  4. Purchase a diversified group of stocks selling under their net-current-asset value.
    Calculate this value as Current Assets - (Total Liabilities + Preferred Stock) ÷ Shares Outstanding

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