Investment Idea

One of the biggest myths to me in investing is the old adage, buy low and sell high.  I’ve made money by always favoring the stocks that have rising prices.  While buying a stock at a lower price makes a lot of sense, it can still be misleading. I remember I had an opportunity to by Toyota from $30 a share up to it finally reaching $82 a share, I purchased it at $82 and some change about two years ago and it sets at around $114 a share today.  One of the reasons I don’t necessarily look for a stock when the price is at a low point is because you never know when the stock is going to hit its bottom.  When you purchase your stocks on the way down it lessens your chances of winning.  Most investors dream of buying a stock at its low point and riding it to the stars, that’s a fantastic desire but very seldom happens. Choosing stocks with rising prices not only obviates that problem but offers several advantages.  One of the main things is that in buying a stock that is rising in price is the fact that it is already doing what you want it to do; go up.  Also, a stock that is hitting new highs has essentially no overhead resistance.  In a book by Bart Diliddo, PHD “Stocks Strategies & Common Sense,” he teaches on buying stocks after they have hit their 52 week high.  It is at this time that the stocks have had plenty of time to consolidate, and are showing new signs of life.

Always, if you’re looking at doing this on your own, pick safe stocks and undervalued stocks with rising prices.  Here are some steps in his book that I’ve found to be helpful in finding great stock picks that you want to rise in share price and not necessarily looking for a dividend:

1. Look at the financial section of your local paper, the Wall Street Journal, Investors Business Daily Barrons, the internet.  Find the list of stocks that have just hit new 52 week highs.  All of these stocks are definitely rising in price.
2. Rank all these stocks in ascending order of Price to Earnings ratio, P/E ratio.  While this may take some work on your part.  Look for low P/E ratio stocks of course, they are undervalued.
3. Assess each stock for safety.  To do this look at Standard & Poor’s Stock Guide, Yahoo Finance.
4. Finally put all the information together in a logical, unemotional way.  Pick the ones you think are the safest, most undervalued and rising in price the fastest.

Common sense and simple logic dictate that picking safe, undervalued stocks rising in price should result in above average performance.  If you don’t have the time we can do it for you with a subscription to Suburban Trader; it is only $10.99 a month for our weekly and bi-weekly stock picks.

Happy Investing

Disclaimer:  Suburban Trader is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment adviser.  You are responsible for your own investment decisions.  All information contained in our newsletters or on our web site(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence.