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Support Ticket 21: Buy Price higher than Sell Price on the Stock Management Guide
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As usual, I'm posting this up after a few calls on the issue came in. It doesn't happen too often, but every once in a while, you'll see a Buy Price higher than a Sell Price on the Stock Management guide after using the First Impression.
This is a function of how the formulas that Toolkit uses are set up. If the quality rating on a company is very low when the First impression comes up, one of the effects of continuing with the default judgment can be the Buy price showing up higher than the Sell price on the Stock Management guide. At least for the moment, we're not expecting to make a change to the formulas that Toolkit's using. The reasoning is that if you're using the automatic judgment of the First Impression, and a stock comes up with a very low score, you would do one of a few things:
- If you're a beginner, Close the company, and move on; there are better stocks out there.
- If you're intermediate, let Toolkit fill in the ssg, but take extra care examining the front and back of the stock study for irregularities.
- If you're advanced, skip the initial judgment, and enter your own from start to finish.
If you get a low initial judgment (usually around 2 or lower), and continue on, you'll likely notice some of the following:
- On the front page of the stock study, it’ll be future growth rates set to zero, sales, profits and earnings being uneven (or trending down) for the last few years.
- In section 2 on the back, it's likely that Pre-tax Profit, Return on Equity (or both) be trending down, or Even at best.
- Section 3 may look normal, but you're likely to see a Reward/Risk figure of less than 1 to 1 in section 4.
These are signs that some of the fundamentals are questionable. If the judgments at the start are coming up with these sort of warning signs, then it's likely that other reports working off of those judgments and that data, are also going to give questionable results.
This is not to say that there might not be some sort of a limiter in the future, to fill in a something like "NONE" or "Not Applicable" on the management guide, if the numbers are going to be upside down like that. For the time being however, it's a matter of recognizing those early warning signs and knowing to proceed with caution.
For more of an idea about what to look for, we suggest checking the SSG tutorial at:
http://www.iclub.com/investing/ssg_agree.asp
As well as the Toolkit 6 webinars:
http://www.iclub.com/clubs/webinar_information.asp
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Support Ticket 21: Buy Price higher than Sell Price on the Stock Management Guide
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