Lesson - 5 Find Stocks to Research

Here is a list of 20 companies that follow some of the rules we've been talking about.
These companies might all be great to buy or they might all be bad investment. But now that we have a list we can dive a little deeper. The goal is not to invest in all these companies, but to find the best investments to invest in.

These companies all have 3 things in common.

1. They all can pay their bills with cash
"Quick Ratio is Over 1"

2. They all should double in value in at least 5 years with current earnings
"P/E ratio is under 5"

3. They all pay a dividend
"Dividend Yield is Greater than Zero"

No.	Ticker	Company
1	AEA	Advance America, Cash Advance Centers Inc.
2	APAGF	Apco Oil & Gas International Inc.
3	BCF	Blackrock Real Asset Equity Tru
4	BCO	Brinks Co.
5	CEG	Constellation Energy Group, Inc.
6	DIT	AMCON Distributing Co.
7	ELNK	EarthLink Inc.
8	GLT	PH Glatfelter Co.
9	IIG	Imergent Inc.
10	ISH	International Shipholding Corp.
11	NE	Noble Corp.
12	QCCO	QC Holdings Inc.
13	SAY	Satyam Computer Services Ltd.
14	SB	Safe Bulkers, Inc.
15	SGU	Star Gas Partners LP
16	SLT	Sterlite Industries (India) Ltd.
17	SNSTA	Sonesta International Hotels Corp.
18	TRMS	Trimeris Inc.
19	UFS	Domtar Corporation
20	USMO	USA Mobility, Inc.

Lesson 4 - Research Dividend Payout History

1. Go to Google Finance
2. Type your Ticker Symbol in the search bar
3. Look at the 5 year chart and you should see
all the dividends this company has paid in the
last 5 years.

Lesson 3 - Researching Investments

4 basic steps to picking stocks to research

Lesson 2 - Ratios

Debt/ Equity

A ratio used to measure financial leverage. This is calculated by dividing liabilities by stockholders equity. This is a good indication of how much equity to debt a company is using to finance its assets. A company with debt/ equity less than 1 shows a higher equity position than debt. This is good.

Return on Equity

A ratio that measures the profitability of shareholder investment. As a owner of stock or a potential owner of stock in a company it is a good idea to see what the return would be on your investment. This is the number.

Insider Ownership

This is a interesting measurement. This number tells you how much a company is owned by management. The higher the number the more company management owns. If this number starts to decline over time it might be the right time to re-evaluate your stockholder position because management is selling ownership.

Lesson 1 - Ratios

P/E = Price to Earnings

A ratio used to value a company. It takes the current price of a stock and the earnings the company has gained over the trailing twelve months. This ratio tells you roughly how many years you must hold the stock before you see a 100% return on your investment. The Danger is if the P/E ratio goes to zero then your screwed.

P/B = Price to Book Value

A ratio used to compare its stock price to the company's book value based on the most recent quarter. If the P/B ratio is lower than 1 you will find the company to be undervalued. Meaning the book value is greater than the stock price. This is a good sign when looking for a stock on sale.

Quick Ratio

This ratio is a good determination of a company's short term liquidity. Meaning, does the company have money to pay its bills without selling inventory or in other words pay with cash or some other very liquid asset. The higher the quick ratio the better position a company is in. Example: If the quick ratio is above 1 then the company can pay all of its bills at least once with cash that year. This ratio is based on the most recent quarters analysis.

How to Invest

How Do I Invest?

"How do i invest?" is perhaps the easiest question to answer. When people invest money they usually do it with a Stock Broker. Different places to invest through provide a variety of uses. Although people might believe E-Trade is better than Scottrade or Ameritrade is better than TradeKing, I only look for the company who provides the lowest cost of a trade. The higher the price to trade the more gains your stock must make just to break even. Low cost trading is what I would promote.

I teach safe investing principles that will help you trade with less risk and more comfort. This is why I only care about who has the best price to trade.

Where to Invest

Where should I put my money?

This is perhaps one of the most debated questions in the investment world. Everyone thinks they have the answer and some people test and retest their hypothesis trying to prove new ideas. I have one phrase in rebuttal.

"A Penny Saved is A Penny Earned"

- Benjamin Franklin

This is true and always will be. We don’t invest in overvalued business, we don’t invest in business that can’t pay its bills, we don’t invest in business that has no structure or plan, and we don’t invest in business that spends their money before they earn it. We invest in business who follows what our grandmothers have taught us about a penny saved is a penny earned.

What to Invest In

What should I invest in?

Since this question is so deeply involved with one’s personal financial situation I have come up with some steps that might be helpful in finding your ideal path for investment.

1. Invest in your budget first! Take some time and make a budget, don’t spend more than you make and have a place for every penny. Then when it comes time follow through with your budget. It’s hard, but worth it.

2. Invest in emergencies. They always happen but can be softened if you have some extra cash that is set apart for that. 1,000 to 2,000 would be ideal. This is your emergency fund.

3. Pay off you debt. After you have your reserve account and your budget organized follow through with paying off one dept at a time. Some say it’s best to start with your shortest length of dept, but I say start with your highest interest rate like credit cards. Credit Cards can be good SOMETIMES but when operated by people who spend more than they earn, it is a bad thing. You can find yourself covered in debt in no time.

*Note to Remember: When one dept is paid off, pile that money into some other debt until you are free from bondage.

4. Take your budget and calculate how much money you need to live on for 6 months. This amount is called your 6 month freedom fund. *It is different from your emergency fund. This fund allows freedom in the workplace and freedom from creditors because you have six months of options. It feels good when your employer doesn't pay your mortgage.

5. After you debt is paid but the mortgage and your reserve and freedom accounts are filled; now it’s time to really invest in the markets. Follow the safe investment strategy and build your nest egg for early retirement. But remember to follow the rules of investing.

When to Invest

When should I invest in the markets?

The time to invest is when you reach step 5. Don’t worry about trying to time the market or that if you don’t invest now you will miss the next Google or yahoo or other over valued stock. When you have your finances lined up then it is the time to invest in the markets.

People often get caught up in the moment of news and run-a-way stocks that seem to keep going up until we buy them. We have to train our minds to keep control over our actions and thoughts. Mind management is the key.

Building your own portfolio takes time and does not happen overnight. And those people who think it happens that way will lose all their investments.

The market is like plants in a greenhouse, there is always something ripe for the picking as long as your know what to look for.

Investment Theory

How do I know when and where to Invest?

This one question can be answered many different ways and by many different people. Investors call this Investment Theory.

While Financial Advisers throughout the world may tell you that Stock A is the best investment and another Advisers Says Stock B, One question is almost always certain. Is this investment going to help Me or the Adviser?

I, at one point was a Financial Adviser and know that people believe whatever the Adviser would have them believe.

I want people to know that I am on their side. I want to teach people how to invest in good profitable companies. I want to help people understand how to analyze stocks. I want to help the little guy make money through smart investing.

About Me

Building people’s ability to think and act with confidence when investing for their futures. We realize that the economy combined with high energy investing styles may appear to be worthwhile, but let me tell you it is only for a short period of time and is meant to entice the small and emotional investor. While I have been one who studied many different styles of investing I have found that Technical "Charting Based" and Fundamental "News Based" investing is still a shot in the dark. I on the other hand I believe in Realistic "Book Based" Investing.

Fundamental Investing consist of guessing the market because of what the public believes. The news that comes from big banks, investment shows and big business can drive a company anyway they want. Technical investing believes that and investment will act a certain way just because that is what has happened in the past, followed by many different confirmations to confirm what charting history says.

I am not one who thinks that these investing strategy's are bad but I am one who believes that when people invest in a good company that makes money, pays the shareholders and is currently undervalued that these are the company's who will make the small investor money. Mutual fund and investment companies have a hard time investing in such company's because they don’t want majority ownership. The reasoning is because when a mutual fund or a hedge fund sees opportunity they place millions of dollars in that opportunity. The Fund won’t do this in a small company because the amount they would invest would in essence purchase the small business or at least majority of the share of that company. When this happens they have to do all sorts of annoying procedures with the Security and Exchange Commission. Second to this however is that a fund worth billions of dollars needs a place where they can invest the majority of their cash to receive a large enough return on investment and a company making 50 million a year can’t give a large enough return to amount to anything. For example: A 500 million dollar fund invest in a 500 thousand dollar company. That company doubles in value to 1 million dollars. Even though this company doubled in value, the gain for the entire portfolio is only 500 thousand dollars or .1 percent of the fund. A small investor would have gained a huge return while the big fund had a return of insignificant amount.

People are always after the big money "The Gold Mine". The investment no other person has thought about. Getting in first and riding the wave of success. Well I’m here to try and help people do just that but on a small and personal scale. I’m not about to recommend anything to you but I will teach you correct investment principles so that you can decide if a investment is really as good as your neighbor says. I’m all about not going with what others say will happen "unless what they say is true" and “if you don’t get in now you’re not going to make a huge return”. This type of skepticism is not fair to the little guy who has built a trust with whoever it is that is recommending the investment. In fact I believe that when you go to a party and people are talking about a great new investment or stock that everyone should invest in, It’s time to sell that company as fast as you can. I call this "Going against People Think".

Consistency, patience, and research will drive success. When people tell you that “That you are analyzing too much about your investment” Don’t believe them! It is not worth losing your money just because some guy tells you at work that "You just have to make a decision without understanding the facts". That might be true in quick business but it is not true in our style of safe investing. I want to know what is going on with the companies that I own. And because I’m a shareholder or Future Investor I have the right to know what, where and when my money is.

It comes down to building your nest egg so that you can retire the way you want. You don’t want to just leave your future to just anyone’s opinion. You need to know the facts about what you’re doing with your money. Just don’t leave it to chance but leave it to an educated decision.

My Purpose

To help people find good investments by teaching sound investment principles. To provide monthly email investment ideas that follow those principles of investing and provide basic excel instruction on how to analyze one’s own financial situation. All this to help people better manage their personal financial behavior.