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Bob Johnson
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Welcome to my author's site. I hope you find my articles interesting and informative. A man-with-a-plan, I am utilizing knowledge gained from my business degree 25+ years in the business world and a similar number of years of investing experience, to manage my investments. I have created and... More
  • Tools And Tips For Writing Reports And Articles, By Bob Johnson

    This is article is for the writer, it should be useful for anyone who does business writing or creates reports involving financial matters, or for that matter, writes an article for Seeking Alpha or another online publisher. For the experienced writer, perhaps there is some little idea included that will make your task a bit easier or enable you to present your ideas a bit more clearly. I know that I am always learning.

    Sought out by other Seeking Alpha authors to critique their writing, asked for pointers for improvement, I am flattered. In addition, I am humbled. There are many competent writers on Seeking Alpha and some excellent ones. Certainly, I am happy to offer some ideas, which I will do now for a broader audience, the writers and readers of Seeking Alpha. I hope you find something helpful, which should in no way diminish your style and unique voice. Many people have good ideas, and I urge you to read broadly and learn from as many as possible. I do not purport that my ideas are in perfect alignment with those of the Seeking Alpha editors, although I know of no concerns. In addition to what I offer, there are many useful ideas on Seeking Alpha Forums. Click on the Contributor Center at the top right of the Seeking Alpha screen, or follow this link: Contributor Forums>Contributor center>Writing great articles.

    Organization

    It is a shame to do a lot of good research using the right tools and gleaning the right information and not present it in a way that is readable and appealing. The key is organization.

    My first experience with paid writing for publication was exactly 50 years ago. Since then, I have written in many genres. These include sports news for a daily paper, essays, short fiction, poetry, a non-fiction book, travel pieces, articles for professional journals, enough business writing to cause the demise of a small forest, perhaps 100 graduate level papers, over 200 sermons, scores of radio commercials and about 50 Seeking Alpha articles. Even though I already had a lot of experience under my belt, my first article here was returned for extensive revision, as I did not quite understand the preferred style, the required format and the key items. Like a short story, a Seeking Alpha article has a beginning, middle and an end. Certain elements should be included in each of these. Seeking Alpha readers like hard data, not ambiguity, and actionable ideas are key. There is room for a lot of variation; here is an outline of an acceptable format for an article about several firms in the same industry.

    Tool, the "Article Sentence"

    "This article will describe the Canadian banking system and the elements within it that make Canadian banks a sound and profitable investment." This is for the author's use. This concise articulation of the content is an assurance that the intent is clearly understood by the author and it will keep himself/herself focused and on track when writing the article. I thank my seminary homiletics professor for introducing me to the "sermon sentence"; the same principle applies to other writing.

    Beginning of the article: This part describes the scope of the article, the insights the reader will gain, and the action that this will enable the reader to take.

    Middle of the article: This is the main part, the body of the article. It describes in brief sections, in my example, the factors that make the Canadian system sound. Evidence is given in the form of hard data.

    • Point 1
    • Point 2
    • Point 3

    It goes on to describe the 5 major banks in detail

    Bank 1

    • History
    • Size and focus
    • Markets
    • Strengths and Challenges
    • Outlook
    • Action

    Bank 2

    • History
    • Size and focus
    • Markets
    • Strengths and Challenges
    • Outlook
    • Action

    Bank 3

    Bank 4

    Bank 5

    Each bank description will include qualitative and quantitative data. It will describe number of branches, employees. It will describe moat-protected businesses, if any. There is a discussion of strength, in terms of capital requirements. A section reviews leadership and governance issues. Other issues discussed as appropriate.

    End of the article: The author presents the banks' common and disparate practices, their challenges and strengths. The conclusion includes a summary of action items with alternatives and options. Assurances to the reader reiterate that they now are well informed and can select investments suitable to their goals, leading to success.

    Notes on the above It would be just as appropriate to make one major point and describe its effect on one company. The overall format would be the same. Most articles consist of fewer than 2500 words, the approximate limit on article size. Shorter is better. Cut out "redundant duplication". Many unexciting articles are written in the passive voice. Give it life. Consistency in format throughout enhances readability and the visual appearance of the article. Several ideas and examples herein are from a Canadian Banking article I wrote, but this is not a discussion of that article.

    Tools, System Software and Computer System

    No one needs to get new computer hardware or software to write a good report or article. However, the features of the operating system and application software can make it easier, and faster, to do a good job.

    I run Windows 7 Professional 64 bit and the latest version of the browser that comes integrated with it, Internet Explorer 10. I feel it is better and safer to use key software from the same vendor when possible. That way there are no issues about compatibility of new releases or consistency of output. Others feel differently. I use the Windows Office package, which includes Word 10 and Excel. I work in compatibility mode with Word, which emulates Word '99 to 2003 and produces a .doc format document rather than a .docx. This version is the preference of Seeking Alpha; it is mature and cleaner. It lacks no important features.

    Excel is essential to viewing many online resources and is an invaluable tool for the researcher/writer. One of my goals for this year is to increase my ability with Excel. I cannot overstate how important and useful it is. When I get stuck and do not know how to do something in Excel, I can usually affect a workaround using other tools. However, this is extremely time consuming. Excel is a commercial product. A no cost alternative, the Open Office Spreadsheet, Calc, allows one to view many applications, such as D4L Data. It is not as powerful as Excel, but you can do calculations. Oracle supports this and there is no user fee. Further information and the download is available here.

    Tool, Graphic Illustrations

    A picture is worth 1,000 words. This is what the top of an article on Canadian Banks looked like. The Maple Leaf coin conveys a message: Canada, rich and pure. I will describe how to put this, or any other image, into a document.

    (click to enlarge)

    I captured the above image with a screen shot of an online Seeking Alpha article using Microsoft One Note. Pasted into this Word Document as a PNG file, I added a border using Microsoft Word Picture Tools. In Word, a red tab appears when you click on a picture, and this enables picture tools.

    I selected a color for the border that matches the article title. The image of the gold coin itself came from a search at Google Images for Canadian Gold Maple Leaf. I saved the image to the Desktop as a PNG image. I loaded it into the online Seeking Alpha draft article using the upload utility, which is found at the yellow symbol on the Write Article toolbar, shown below.

    To create this illustration of the writing toolbar, I took a screen shot with One Note and pasted the image into this Word text. Using the path Word> Insert> Shapes I added the image of the arrow below the toolbar and captured both, using One-Note again. I saved it to the desktop as a .jpeg file. I opened it with IrfanView, which is a free and downloadable imaging tool. Using IrfanView I added the two pixel black border and inserted the text, "Upload Graphics". There are surely other ways to create this graphic. I like IrfanView because it is easy to use and fast. It is my choice for adding borders and inserting text to images. More information and a download is here. IrfanView was developed as FREEWARE by a young man from Jajce, Bosnia; a generous genius.

    While the Gold Maple Leaf picture sets the tone of the Canadian banking article, this kind of illustration can be distracting and counterproductive if overdone. Editors have not been shy in informing me of just that. While visual information is most useful, do not illustrate a Seeking Alpha article like a travel piece or an old issue of Life Magazine. Factual business writing is not illustrated solely for decoration and often has a paucity of images. The perennial example of that is the Wall Street journal. Clear graphic presentation of information, however, is very helpful, and adds value.

    Displaying Information in Tables

    I use Microsoft Word Tables to display data. I believe that many other authors do too, and some do a terrific job presenting columnar data with Excel. First, allow me to describe where I get the data, and how I get it into a table. Data exists in tabular form from many sources. These include FinViz, Morningstar, Yahoo Finance, Seeking Alpha, F.A.S.T. Graphs and other data sources. The below is a table created from the Seeking Alpha Portfolio tab. Selection of the companies was with a FinViz screen, and the ticker symbols were pasted into the portfolio input utility.

    Part of a table as selected from an initial screen

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    Above is the finished product after further screens have narrowed the selections to 7 and the table presented in a more appealing form. Generally, I keep the same color scheme throughout an article.

    Often, all of the required data is from one source. Sometimes, though, data will come from three or four different sources and it is necessary to select columns from different places. See the example below. The Price, Target, Target, P/E and PEG are from Yahoo Finance, the Yield, Payout and DGR from Seeking Alpha and the 5 year EPS Growth from F.A.S.T. Graphs. The sources must list the companies in the same order or you must reorder them. Some sources alphabetize by Name, others by Symbol. Carefully check the order of firms like Annaly Capital (NYSE:NLY) and AT&T (NYSE:T). In addition, take a look at like fields from different sources to be sure that they are reporting data from the same period and in a consistent manner.

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    • A company logo or service mark can trigger recognition and heighten relevance.

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    • A table can be in a very simple format

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    • Data presentation from many sources with can have uniform colors, such as this FAST Graphs chart in deep blue.

    • Comprehensive tables for reference have their place

    (click to enlarge)

    Charts

    There are many sources of charts online, and usually you can find one that suits your purpose. Often Yahoo Finance charts suit my needs well, and I simply grab them using One Note and then use IrfanView to add a border and other items. The below chart is from the same article as the above Word Tables. The chart includes a message I have been trying to get out for a couple of years, Canadian Banks are not like US Banks.

    (click to enlarge)

    Graphs and charts you develop as well as ones displayed by your sources can illustrate your point. There are useful charts in many third party documents, give mention of the source.

    Some of the various forms of graphs and charts I have used the past year are shown below.

    • There are problems arising from doing business in Mongolia.

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    • Adding borders of similar color can enhance the visual unity of an article.
    • Mining does not exist in a vacuum

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    • A colorful look at sectors

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    At the end

    Your carefully researched article, well organized, well written with clarity and brevity will draw many readers. Your illustrations, consisting of graphs and charts, reinforce your key points making action on your suggestions the logical outcome. Good luck and enjoy!

    A companion blog, The Best Online Tools for Stock Selection and Analysis, also by Bob Johnson, provides online resources for research and analysis of stocks.

    Nov 21 6:02 PM | Link | 10 Comments
  • The Best Online Tools For Stock Selection And Analysis, By Bob Johnson

    This article provides guidance in the selection and use of tools and resources that enable an individual investor to discover, analyze, select and monitor stocks suitable to meet their investment goals. It focuses on those sites and tools, which many others and I find most useful. I note with "tb" those that I have on my toolbar. This article lists introductory and basic information sources, suitable for beginners and seasoned investors. After reading this article, you should come away better equipped to more efficiently select and analyze stocks, saving you time and enhancing your investing success.

    Where to Start

    Books
    For the beginning investor a great place to start is with a book that gives an overview of individual investing including the definitions of stocks, bonds and other investments. In addition, these books highlight the important criteria, the measuring sticks, which one uses to determine the quality and value of stocks. Are books an online resource? That's a bit of a stretch but you can buy them online from Amazon.com, read them on your Kindle, as well as seek them out in a local bookstore or use them free in your public library. Basic investing books give you an overview and a vocabulary, a framework upon which to build.

    Investing for Dummies is part of a series, which introduces many different fields with definitions of terminology and an easy to read overview. Many kinds of investments are available and besides stocks and bonds. They include bank deposits and bank CDs, insurance products and annuities, precious metals, collectibles and direct investment in real estate. Stock Investing for Dummies, focuses on this aspect of investing as does this article and do a large percentage of the articles on Seeking Alpha. Our emphasis is on the independent individual investor who is selecting and buying stocks. For more detail and depth than the "Dummies", there are many books written for the general investing public which give overviews of the financial principles and "how to" basics.

    The last title stands alone as the seminal work on value investing is by Warren Buffett's professor at Columbia. In addition to these, there are a number of useful books by great investors including Peter Lynch, Warren Buffett and John Bogle.

    Online

    There are also many resources available online for the beginning investor. As you might expect, a number of them come from providers of financial products and services. Two of the best in this category are Vanguard tb and Fidelity, which both create and manage mutual funds as well as provide brokerage services and other services for investors. Investopedia.com tb offers a vast collection of resources covering many aspects of investing, and includes tutorials and focus articles. Their Stock Picking Strategies consists of 10 sections examining popular and useful methods of selecting and analyzing stocks. I use Investopedia's Dictionary when I want to know the definition of an investing term. For example, if I search for P/E Ratio I first get a page that gives me a one-line definition. Below this is an example of how it is calculated. Next comes an in depth definition which includes its usage and the usual meaning of terms such as high P/E and low P/E. Finally, there is a video, which illustrates how the P/E ratio might be useful in selecting between buying stock in 'Al's Ice Cream' or 'Bob's Frozen Snacks'. In addition, Investopedia offers many instructional videos from "What are Stocks?" to "The Time Value of Money" to "Annuities".

    Sources of Information

    Qualitative Information

    There are two kinds of information available about companies and one is qualitative, information which might be included company web sites and in annual reports along with the quantitative data, the numbers. The qualitative is informative dialog and may include things like the company's plans and background on its people. It sets out the firm's purpose, relates to shareholders the goals of management and does this reporting is with words and sometimes pictures. Other sources of information about the company may come from articles like this online at Seeking Alpha tb, and from primary news sources like Bloomberg and Thompson Reuters. There are financial newspapers which specialize in reporting the news of business and finance, the most widely read of these is the Wall Street Journal. Other daily papers of this type include the Financial Times and Investor's Business Daily. Respected periodicals include Forbes, Barron's, The Economist and Business Week. These newspapers and magazines are available online or in paper form. There is also an endless supply of online newsletters; most give you news and information free; some are on general investing while other focus on specific industries. For example, I subscribe to 7 newsletters on mining, which include Mining Digest, MineWeb and MetalMiner.

    The best source of information about companies is often the companies themselves. You can access their web site, read their annual reports and subscribe to their press releases online. One of the keys of Warren Buffett's success has been the reading of several years of a firm's annual reports before making a purchase. Always read the letters to shareholders near the front of the annual reports.

    Quantitative Data

    While all of the sources above contain financial data, the Wall Street Journal was the primary source of data before the inception of the internet. Their online Market Data Center tb is an excellent resource. Other well-known and popular web sites which provide extensive financial data on companies are Yahoo Finance tb, a primary source for me, which includes historical price and dividend data; MSN Money, provides quotes, details about companies and news. FinViz tb Financial Visualizations, which includes charts with technical features, Morningstar tb, 5 years of financials, 10 years available for premium subscribers. It also contains expert commentary on many companies (premium subscribers) and a rating system on stocks. Google Finance, is a provider of quotes, data and news services. YCharts tbcalls itself The Financial Terminal of the Web is a source of a great chart creator, lists of rankings, economic data and a passable screener. It has a lot of good free information and very expensive premium information for pro users. Merrill Edge and Charles Schwab provide many good investing tools for their clients. EDGAR is the name of the Security and Exchange Commission's (SEC) official filing site. All companies, foreign and domestic, are required to file registration statements, periodic reports, and other forms electronically through EDGAR. Anyone can access and download this information free. Individual investors probably under-utilize this primary source of official information. Dividends4Life, aka D4L, is a low cost subscription Dividend Growth investing site, which takes a quantitative approach to selection of superior stocks and provides data in three formats. A color-coded spreadsheet provides an intuitive user Dashboard. Most useful to me is D4L Data. This runs on the free and downloadable Open Office spreadsheet. The information covers 210 popular Dividend Growth Stocks. In depth Reports on companies are their third valuable resource.

    Screens A screen is a user definable utility, which enables a person to seek stocks with certain characteristics. Yahoo Finance, Google Finance, CNBC, FinViz, F.A.S.T. Graphs and Morningstar provide screens. An investor might want to search for stocks with a market capitalization of over $10 Bil., yield of at least 3%, a return on equity of at least 10, a P/E ratio of less than 15, a debt/equity ratio of less than 50% and a payout ratio of less than 60%. After entering these values into the screen, the database would then return a list of stocks, which met or exceeded these requirements. This search on FinViz discovered the below 19 companies.

    (click to enlarge)

    David Fish's US Dividend Championsis much more than a screen. This resource, lists in Excel spreadsheet format, stocks that have had consecutive annual dividend increases for 25 years. Challengers have 10 to 19 year records of growing dividends, and Contenders of 5 to 9 years. Collectively, known as the CCC lists, these are exactly the stocks the Dividend Growth investor is looking for. This is a free service and is best utilized with Excel, though a downloadable PDF format is available. Using Excel, your only limitation in the manner in which you can sort and display the data is your expertise with Excel. The database includes 470 stocks and 78 data columns. Awesome.

    Valuation The old maxim is, "buy low sell high". The problem then, lies in finding out the true worth of a stock. One theory proposes that only the market knows the worth of something, and when the stock is sold, the sale price describes its worth. While that argument has appeal on the surface, it treats a share of stock as something that has value in of itself. It is more accurate to understand that a share of stock is valuable only for what it represents, that is, the partial ownership of a company. So, the better question to ask is what is the value of 1/1,000,000th of XYZ company which issued 1,000,000 shares of stock. One way of calculating this would be to examine the value of the company as shown on its books and dividing it by 1,000,000 to determine the book value per share. Another measure is to look at its price in relation to its earnings. Here we come up with the P/E ratio mentioned above in this article. Is it dear or cheap in relation to the market norm (15) and the current market average P/E? Is the market possibly selling at a very high valuation, i.e., a P/E average of 19 indicating the entire market is overpriced? Those are some of the questions we want to be able to answer.

    F.A.S.T. Graphs tb is based on a foundational truth, "Earnings determine the market price of a publicly traded company in the long run". It is a valuation tool without peer, and provides a visual presentation of stock prices, earnings adjusted stock value and P/E. It also includes a stock screener and has links to other data sources. This is a F.A.S.T. Graph of Norfolk and Southern Rail Road (NYSE:NSC). The green borders around the below graphs were added with MS Word. The current price, indicated by the black line, is considerably below the actual value of the stock (orange line) and also below the amount which would be indicated by the normal P/E (blue line).

    (click to enlarge)

    The Discounted Cash Flow Calculator is based on the theory that the value of a company is equal to the value of its future earnings, discounted to their net present value. The DCF calculator is linked here. Several sites publish 5 year expected future EPS, and two of these are FinViz and Wall Street Journal Marketplace.

    (click to enlarge)

    Morningstar Premium provides a fair market value and a suggested buy price. It also rates stocks by their value with its star system. Four or five stars indicates a good buy.

    Forecast Tools

    These are important to investors because we buy stocks for their future benefits to us, not their histories. Will Rogers said, "Buy stocks that are going to go up. If they don't go up, don't buy them." Analysts discern target prices for stocks and make earnings estimates. Yahoo Finance reports these. Analyst input may be a component of a forecasting tool; it is with the F.A.S.T. Graphs program. I like the fact that it allows user input to increase or decrease the expected growth rate. Below we see the Estimated Earnings and Return calculator for Norfolk and Southern. If we feel it is high because of the problems in the coal industry, we can adjust the earnings increase rate downward. The future is always uncertain, and there is a range of outcomes. For a clearer understanding of F.A.S.T. Graph features, I suggest you get further information, available in video format, and try a demo here.

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    For Chart Technicians

    FinViz displays graphs with technical overlays on their quote page and even allows you to screen for certain patterns. I created a screen for stocks that had gained over 10% in the past month, with a strong channel up pattern, and which are above their 50-day moving average. See the two charts below. These stocks appear to be going up.

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    Target Prices

    Yahoo Finance and others list a target price for stocks, that is, what analysts estimate the price of the stock will be one year hence. I compare the price of possible buys and current holdings to the target price. Is Westpac Bank (NYSE:WBK) oversold? The analyst target was set at $121.49 and the current price is $131.53. Is there room for growth in BHP Billiton (NYSE:BBL)? The target price is $71.81 and today's price is $63.72. This can be one of many inputs in a buy/sell decision.

    Portfolio Tools

    Portfolio tools are useful to keep track of your assets. This is especially true if you own stocks and securities with several brokerages, fund companies or multiple 401k's. You can run a reflection of what you have at each house, create a consolidated portfolio and track many aspects of performance, such as percentage above/below 200 day SMA. I keep a couple of portfolios on Yahoo Finance and have copies of two important portfolios loaded onto Morningstar's system, as well as some portfolio copies at F.A.S.T Graphs. Each of the services has uniqueness, that is, it reports values not available elsewhere.

    The Seeking Alpha tb portfolio utility is feature rich in that it provides a vast array of measurements. I frequently use it to create reports on sample portfolios. I like the fact that both dividend yield and the dividend growth rate (DGR) are included and on the same page.

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    Actions

    I believe that the acquisition and analysis of relevant information is essential to intelligent investing. I hope that this has increased your understanding of what is available, and provided to links for you to get it. I am confident that these tools will help make your selections the most suitable ones to meet your goals, and help you to monitor the performance of your holdings.

    This is a link to my Premium Seeking Alpha Articles which go into depth on selection criteria, due diligence, portfolio construction and profile a number of industries and companies.

    I believe that as your knowledge increases and as you sharpen your skills, you will prosper. All shall be well. Good luck!

    Nov 21 5:50 PM | Link | 3 Comments
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