Sell Indicators in Toolkit 6
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The document provides guidance on using sell signals in an investment toolkit. It outlines reasons to consider selling a stock, such as a company facing problems that threaten future success or a stock becoming overvalued. The toolkit features help analyze stocks by spotting deteriorating earnings, sales, margins or other issues that contradict the initial investment thesis. It also identifies overvalued stocks using metrics like relative value and reward/risk ratios. The portfolio report card uses color coding to highlight problem areas for review.
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Sell Indicators in Toolkit 6
- 1. 10/13/2010 Sell Indicators in Toolkit 6 by Doug Gerlach ICLUBcentral Inc. September 2010 Sell Signals in Toolkit 6 Toolkit 6 never tells you what to do. Guide to help you with your own decisions. Toolkit 6 features help you with sell analysis: Stock Study Portfolio Report Card Quarterly Trend Analysis 1
- 2. 10/13/2010 2 Reasons to Consider Selling 1. Company has problems that threaten future success of business. 2. Stock price is overvalued when compared to likely future prospects. Spotting Problems in Stock Study Company is acting contrary to reasons that drive your purchase decision: EPS and/or Sales falling. Profit margins deteriorating. 2
- 3. 10/13/2010 Growth Is Disappearing Profit Margins Declining 3
- 4. 10/13/2010 Profit Margins Are Falling Stock Is Overvalued 4 Strikes, Youre Out! 1. Relative Value > 150% 2. Stock in Sell Zone 3. Reward/Risk Ratio < 1:1 4. Total Return < long-term bond or savings long- rates 4
- 5. 10/13/2010 Relative Value > 150% Stock in Sell Zone & Rwd/Rsk Rwd/Rsk Ratio < 1:1 5
- 6. 10/13/2010 Low Projected Total Return Portfolio Report Card Offense & Defense approach. Red highlighting points out key problem areas. 6