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| What is Strategic Investing? |
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| What is CAN SLIM? |
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| Locating Winning Stocks |
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| Trading Rules |
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| Frequently Asked Questions |
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| Strategic Investing Portfolios |
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| Subscriber Benefits |
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Strategic InvestingA Service of Adrich Corporation |
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| Strategic Investing focuses on stocks with increasing revenues and profits. KISS + SF! |
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Trading Rules The rules that are set forth herein require discipline by any investor to have success. In keeping with our KISS & SF axioms, the Strategic Investing Rules are few. First rule Invest only in stocks that meet the Strategic Investing filters using data from either the IBD® data tables or from High Growth Stocks. The filters for the Aggressive and Conservative portfolio are shown below:
Second rule Look at a chart of each stock that passes the Strategic Investing filter prior to your taking a position and print it for your records. It is also a good practice to mark up the printed chart with the price and reason for purchase. We add to each chart the ratings for Accumulation/Distribution , the total of EPS+ RS Rating, and either the composite or ERG depending upon which charting service your use. If you use the MarketSmith charts from IBD® or StockCharts, you can annotate the information directly on the chart. If you have the Pattern Recognition option from MarketSmith, you will also have the CAN SLIM® attibutes on the chart. Third rule Invest in a maximum of 15 stocks. If you have fifteen stocks in your portfolio and another stock meets the Strategic Investing filter and passes your due diligence review, sell the lowest performing stock in your portfolio to raise the funds necessary to purchase the new stock. Allocate to each new position about the same percentage of your existing portfolio value. If you decide on only 10 positions, allocate about 10% of your current portfolio value to the position. Fourth rule Immediately set your Stop Loss (or Action Point) either as an Alert or as a hard Stop at a level that you are willing to risk. Our initial Stop Loss is 3% below the average entry price for the position. Depending upon your risk quotient, you may set yours at some level either higher or lower than our 3%. Thereafter, we adjust the Action Point using 6% of the closing daily price when that calculation exceeds the 3% initial Action Point. After a profit of 15% exists in the position, we then use the 8 x 20 simple moving average cross-over to determine the Action Point. Fifth rule If a Stop Loss (or Action Point) is activated, get out of the stock immediately. A Buy Limit order at the Stop Loss (or Action Point) can be placed by more aggressive investors somewhat higher than the price at which the Stop Loss (or Action Point) was executed. We generally suggest that you look at the Average True Range for the stock and set the re-entry point above that to prevent whip-sawing affecting your profits. If the Buy Limit order is executed reset the Stop Loss (or Action Point) at the original Stop Loss (or Action Point) unless the new Stop Loss (or Action Point) based upon your re-entry price would be higher. You do not want to lose more money on the trade. The commission expense is the insurance premium paid to protect the profit. Sixth rule We also look at charts of the stocks in our portfolios each week to determine whether the stock still exhibits the characteristics that caused us to purchase it. We sell a long position at any time the 8 day simple moving average is lower than the 20 day moving average.
CAN SLIM and variations are marks of Investor's Business Daily, Inc. and affiliates ('IBD').
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Last updated - February 6, 2007