Overview

Technicals or fundamentals? While there is much discussion about which method to use, we highly recommend that you use both. Each method of study has implications for the trading decisions you make.

Whether you find your company through stock screening, tips, stock pick list, newsletter, etc., all traders should go through the following steps to increase their confidence in the decisions they make.

1. Evaluate the company - Fundamentals are used to evaluate whether or not a company is one that you would like to invest in.
2. Good time to buy or not? - A company may look like a sound investment. But is it a good time to invest in it? This is when technical analysis can help you to determine your best buy/sell signals and decision-making criteria.

This month's newsletter will highlight some useful fundamental ratios in a quick and handy table.

SAVE THIS NEWSLETTER - It's a great reference!

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Writing Straddles
By Joss Ross

To the uninitiated, the words straddle writing are mysterious and confusing. In fact, these words may be more confusing than the words put and call.

However, because of advertising and public education by the various option exchanges and their associated brokerage firms, millions of investors have become familiar with and gained some understanding of how puts and calls are used in simple investment strategies.

The level of understanding of most investors is usually how to simply buy put and call options. Buying them is done with the idea that large potential gains are available, while at the same time risk is predetermined, finite, and limited. The bias toward purchasing puts and calls is understandable, because it requires only a small amount of capital to test the strategy, offers a high degree of leverage, and it offers very high profit potential.

Read Full Article

Net Present Value (NPV) Method

A method of ranking investment proposals. NPV is equal to the present value of the future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment.

(See Glossary)

Other

Pump & Dump(ster)

Occasionally, we get "Hot Stock Pick" spam in our mailbox. Normally, we delete them but from now on we're going to research them and post our results. See them here.