Wednesday, January 16, 2013

Investing for everyone

As a full time trader I always struggle how to come up with a system that the average person with a 401k or other savings can use and invest as safely as possible with the least amount of time and stress. I understand that for most people following the markets and dealing with stocks is akin to trips to the dentist, necessary but uncomfortable, long stretches of tedium with sharp hits of pain and then hopefully a nice clean smile.

I just read an interesting article on Warren Buffett that attempts to reverse engineer his technique for stock picking. If the results are correct, the article comes up with a stock screen (using a free online screener, finviz) that combined with a very basic understanding of technical analysis could produce a simple strategy.

So you would end up with a hybrid fundamental and technical system for stock picking for long term investing. Here is the article, and a super simple suggestion for understanding technical analysis. Combine these two parts with a 7-10% stop loss rule and one would be 90% of the way there:

Click on this for the seeking alpha article.

Click here for the amazon link to a very basic technical analysis book.