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The Real Math of Falling Stock Prices

16 may 2008 - Features - Editor

Downsides must have upsides. Take heart and enjoy the rule of bears. Stock market sentiment can work against you. Losses await those who flow with the investment tides. That is why salmon is precious. It fights adversity to thrive. You can do the same with stock price trends.

Less is more with the Price to Earnings Ratio. Some stocks dive because the corporations are poorly managed. Others suffer emotional losses of the collective stock exchange mind. These are the ones to hold on with dear life. The investment nightmare has to end. Dividend records will matter when the stock market turns into a bull again. Stocks that pay on the button each quarter matter most. The stock exchange is not a China shop. There is a method to the investor bull’s madness. Stocks with poor Payout Ratios will not gain in any stock market conditions.

You need a method to get out of the whirlpool of stock market losses. It is a matter of number crunching and studying archives. We can do it for you. However, getting your business is not our only aim here. So here is the low down.

Put down stock trade symbols of companies with the best Dividend Five Year Growth Rates in each industry of all sectors. Note Payout Ratios and Net Profit Margins as well. Weed out the ones that do well once in a blue moon. Look for consistency.

Now go to the Investor Relations tag of the company web sites. Study past stock guidance. Has management walked the talk? Is the CEO transparent about risks and assumptions? Does the business model make sense?

This method works like a funnel. You end up with only a small fraction of the stocks you have researched. However, dividends await you in the crucible. The spring-summer transition of 2008 is a good time to buy these stocks. The deals could get even better with more bad news. However, you will gain in 2009 and beyond even at today’s stock prices.

 


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