The Best Strategy to Earn Money

Whether or not you can get money depends on what method you are using. You may buy stocks from others’ recommendation or rumor or charting methods. Technical analysis methods are direct and easy to use, but they are not always correct.

The best way is buying value stocks and holding them until getting money. The reason is very simple: This method is proved very effective and repeatable by Peter lynch and Warren Buffett. But how do you know a stock is a value stock and is undervalued?

1. The best way to get a value stock is to research a stock’s past, present and future.
1). the past: The stock has very strong profitability in the past 3 years or 5 years. Warren Buffet always likes the stocks with past 5 -10 years average ROE >15%. 2). the present: No debt, the profit margin is high, big free cash, PE is low, sector leader, big insider holder… 3). the future: Growth, growth and growth. The future profit growth should be strong. It is said the 80% EPS growth estimation is correct by the Wall Street analysis.

2. The best way to know if a stock is undervalued is comparing its PE with its EPS growth. It is Peter Lynch's way, “The P/E ratio of any company that's fairly priced will equal to its growth rate ... But if the P/E ratio is less than the growth rate, you may have found yourself a bargain.…”.

The software from Trade4Rich.com has the basic functions to check if a stock is undervalued and a stock’s past, present and future. It is a requisite tool to a stock investor.