WHAT ARE THE BUY AND SELL ALERTS based on GRAHAM'S FORMULA ?
Every investor need to have a clear process for buying and selling stocks. The first step of this process should be determing if a company is cheap or not (using for example Graham's formula). But a cheap company from your point of view does not make a good investment : its real value has to be recognised by the market too,
otherwise your stock will never appreciate.
Very often, a stock rises with a catalyst : good news, good results, new prospects... the change in the market perception will often be reflected by a change in analysts forecasts.
That's why you need to combine a cheap stock (high margin of safety over 50%) to a frank earnings revision (+5%) to get a BUY signal.
Sometimes, a stock is cheap, but earnings are revised downward (-5%) : obviously, something has changed for the stock and analysts re-consider their position ; you should then consider being cautious and exiting your position if you had bought the stock previously : this is an EXIT BUY signal.
When a stock is over-valued (margin of safety < 0%), it can be overvalued for a long time ! so you can consider selling the stock at the moment the margin becomes negative, but it could be wiser to wait untill earnings begin to be revised downard ; if so, this is a SELL SIGNAL.
BUY AND SELL ALERTS should not be taken as a recommandation : you should not rely on these alerts to make your investment decision untill you have made your own "homework" : balance sheet analysis, annual report reading...
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Buy and Sell Alerts are defined this way :
BUY if :
- Margin of safety is > 50%
- Earnings revised  more than 5%
STOP (exit Buy) if :
- Earnings revised  more than 5%
SELL if :
- Margin of safety is < 0%
- Earnings revised more than 5%
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- U.S.A.
- Canada
- U.K.
- France
- Germany
- Japan
- Hong-Kong
What is Graham's Formula ?
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