5-Step Investing Formula

Online Course Manual

Appendix

10
Section 10 of 11

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THE 5-STEP INVESTING FORMULA www.investools.com Appendix

Section Contents

SECTION 10 APPENDIX
Phase 2 Stock Scoring Form ................................................................. 4

Phase 2 Quick List for Zacks Report and Market Guide ....................... 6

Investment Tracking Record .................................................................. 8

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Course Overview

INTRODUCTION SECTION 6 Step 4: Technical Analysis

SECTION 1 Getting Started Technical Indicators
Logging into the INVESTools Investor Toolbox Moving Averages
Support Links MACD
Workshop Review Stochastics
Account Information Volume
Subscription Renewal Support & Resistance
Technical Support Buy Signals
Contact an Instructor Money Management
Sell Stop Orders
SECTION 2 Introduction to Investing How Many Shares to Buy
Tolerance for Risk Sell Signals
Setting Goals Insider Trading
Asset Allocation
Tax Exposure SECTION 7 Step 5: Portfolio Management
Brokerage Firms Creating a Portfolio
Introduction to the 5-Step Investing Formula Managing Your Portfolio
Paper Trading Account

THE 5-STEP INVESTING FORMULA

BONUS SECTION
SECTION 3 Step 1: Searching for Stocks
Using a Prebuilt Search SECTION 8 Bonus Topics
Navigating the List of Stocks TurboSearch
Index Tracking Stocks / Exchange-Traded Funds
SECTION 4 Step 2: Industry Group Analysis Dow Jones Industrial Average—
Top-Down Analysis The Diamonds (DIA)
Big Chart S&P 500—The Spider (SPY)
AutoAnalyzing All Stocks in a Group NASDAQ—The Qs (QQQQ)
Best & Worst Industries List
SECTION 9 Introduction to Options
SECTION 5 Step 3: Fundamental Analysis Advantages /Risks of Options
Phase 1 Leverage
Phase 2 Call Options
Price Pattern Put Options
Volatility Covered Calls
Zacks Report
Market Guide
News SECTION 10 Appendix
AutoAnalyzer™ Phase 2 Stock Scoring Form
Phase 2 Quick List for Zacks Report and
Market Guide
Investment Tracking Record

SECTION 11 Glossary

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PHASE 2 STOCK SCORING FORM

Price Market
Symbol Pattern Volatility Zacks Guide News

Score each stock using the following scale:

A = EXCELLENT
B = VERY GOOD
C = NEUTRAL
D = POOR
F = BAD

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THE 5-STEP INVESTING FORMULA www.investools.com Appendix

PHASE 2 STOCK SCORING FORM

Price Market
Symbol Pattern Volatility Zacks Guide News

Score each stock using the following scale:

A = EXCELLENT
B = VERY GOOD
C = NEUTRAL
D = POOR
F = BAD

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Phase 2 Quick List for

Zacks Report and Market Guide
Zacks Report
Zacks Estimates Section
• Year-over-Year Estimates should be rising
• Quarter-over-Quarter Estimates should be rising
• 20% or more projected Earnings Growth Next 5 Years
• Preponderance of Estimate Increases as opposed to Decreases (zeros are considered positive)

All of the above items should meet the standards to score an “A” for this section.

Company/Industry Comparison
(The company is on the top line and the Industry Group is on the next line.)

• 5-Year PAST Growth is equal to or higher than the Industry

• Current-Year Growth is equal to or higher than the Industry
• Next-Year Growth is equal to or higher than the Industry
• 5-Year FUTURE Growth is equal to or higher than the Industry

All four of the above items must meet the standards to score an “A” for this section. (Any item marked “N/A” is
ignored and the score is not penalized.)

Projected P/E will normally be higher for the stock if it scores high against the group. Expect this. If it is lower than
the group, it is considered a bonus but has no score.

Quarterly Earnings Surprises

• The top line is the analysts’ estimates, and the bottom line is the actual number turned in by the company
• All items in the bottom line must be equal to or larger than the top line to score an “A” for this section

(If a bottom-line number scores lower than the top-line number, the score is a “B,” two would be a “C,” etc.)

Current Ratings: Buy, Sell, or Hold Recommendations

• 1.0 to 1.5 scores an A
• 1.6 to 2.5 scores a B
• 2.6 to 3.5 scores a C
• 3.6 and over scores an F

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Market Guide
Return on Equity (ROE)
• Look for ROE to meet or exceed the national average of 18%
• If the ROE is less than the national average, check to see what the average ROE is for the industry; if the
industry ROE is less than the national average, measure your company to the industry
• Whether the ROE is scored against the national standard or the industry standard, subtract one grade for
each three (3) points below the standard used (18% or the industry standard)

(The Company-to-Industry ROE can be checked in the Company Profile under the “Company Reports’’ section.)

Share-Related Information
• Float should be 5M shares or more (this is not a requirement and is not scored, but it’s nice to have)

Revenues and Earnings

• Year over year Revenue Growth continually increasing
• Year over year Earnings Growth continually increasing

Growth Comparisons (1-Year Column Only)

• Revenues growing 25% or more
• EPS (earnings) growing 25% or more
• EPS (earnings) growing faster than Revenues

Any item with less than 25% growth or earnings that is not growing faster than revenues penalizes the score one
grade for each item not meeting the standard.

The worst score would be a D for the “Growth Comparison’’ section, but by that time, you might not even care!

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THE 5-STEP INVESTING FORMULA www.investools.com Appendix

Investment Tracking Record

Stock Name/Symbol:____________________________________________________________________________________
Phase 1 Score: #Positives______ #Negatives______

Phase 2 Scores – A, B, C, D or F for:

Price Pattern ______

Volatility ______
Zacks ______
Market Guide ______
News ______

Entry Profile

Industry Group and Rank: Up______ Down______ Sideways______

MACD 1 Year Green______ Red______
MACD 5 Year (long term) Green______ Red______
Stochastics Green______ Red______
30-Day Moving Average Green______ Red______
Volume 150% of Average Yes______ No______

Date Purchased: _____/_____/_____

Price Paid: $_____
Number of Shares: #_____
Target Price: $_____
Entry Stop-Loss: $_____

Did you buy this stock for the long term or short term? Why?_________________________________________________

Exit Profile

Date Sold: _____/_____/_____

Price Sold: $______
MACD 1 Year Green______ Red______
MACD 5 Year Green______ Red______
Stochastics Green______ Red______
30-Day Moving Average Green______ Red______

Why did you sell?_____________________________________________________________

How would you rate this trade overall (10 is high)? 1 2 3 4 5 6 7 8 9 10

What did you do in this trade that you want to use in future trades? __________________________________________
_____________________________________________________________________________________________________

What did you do in this trade that you want to avoid in future trades?_________________________________________
__________________________________________________________________________________________

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contractors are, in such capacities, licensed financial advisers, registered investment advisers or registered broker-dealers. Neither do they provide investment or financial
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