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Sell Indicators in Sell Indicators in Toolkit 6Toolkit 6

by Doug Gerlachby Doug GerlachICLUBcentral Inc.ICLUBcentral Inc.September 2010September 2010

Sell Signals in Toolkit 6Sell Signals in Toolkit 6

•• Toolkit 6 never “tells you” what to do.Toolkit 6 never “tells you” what to do.–– Guide to help you with your own decisions.Guide to help you with your own decisions.

•• Toolkit 6 features help you with sell Toolkit 6 features help you with sell analysis:analysis:–– Stock StudyStock Study–– Portfolio Report CardPortfolio Report Card–– Quarterly Trend AnalysisQuarterly Trend Analysis

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2 Reasons to Consider Selling2 Reasons to Consider Selling

1.1. Company has problems that threaten Company has problems that threaten future success of business.future success of business.

2.2. Stock price is overvalued when Stock price is overvalued when compared to likely future prospects.compared to likely future prospects.

Spotting Problems in Stock StudySpotting Problems in Stock Study

•• Company is acting contrary to reasons Company is acting contrary to reasons that drive your purchase decision:that drive your purchase decision:–– EPS and/or Sales falling.EPS and/or Sales falling.–– Profit margins deteriorating.Profit margins deteriorating.

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Growth Is DisappearingGrowth Is Disappearing

Profit Margins DecliningProfit Margins Declining

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Profit Margins Are FallingProfit Margins Are Falling

Stock Is OvervaluedStock Is Overvalued

4 Strikes, You’re Out!4 Strikes, You’re Out!1.1. Relative Value > 150%Relative Value > 150%2.2. Stock in Sell ZoneStock in Sell Zone3.3. Reward/Risk Ratio < 1:1Reward/Risk Ratio < 1:14.4. Total Return < longTotal Return < long--term bond or savings term bond or savings

ratesrates

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Relative Value > 150%Relative Value > 150%

Stock in Sell Zone &Stock in Sell Zone &Rwd/Rwd/RskRsk Ratio < 1:1Ratio < 1:1

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Low Projected Total ReturnLow Projected Total Return

Portfolio Report CardPortfolio Report Card

•• Offense & Defense approach.Offense & Defense approach.•• Red highlighting points out key problem Red highlighting points out key problem

areas.areas.

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Portfolio AlertsPortfolio Alerts