Whether you’re a novice investor or experienced trader, most of us can stand to gain more knowledge about the stock market and different investing strategies.

Investor education is exactly what Scotia iTRADE had in mind when it launched a series of free direct investing courses online.

Through the Scotia iTRADE U education platform, investors can access free hour-long webinars on strategies such as income investing using ETFs (presented by Horizon ETFs) and using options as an income strategy (presented by Montreal Exchange).

You’ll also find education videos like this one explaining the difference between market orders and limit orders:

Investor Boot Camp

Scotia iTrade U has a boot camp aimed at sharpening the skills of self-directed investors. I had the opportunity this week to sit through the first two-hour boot camp on stock selection led by Pro Market Advisors, a consulting firm with experience in market disciplines such as technical analysis, fundamental analysis, retirement plan strategies, option strategies, and risk management.

DIY Investor Boot Camp

The webinar started out by asking the participants how they go about their stock selection process. What became clear was that most novice investors gravitate towards stocks they know and recognize – big names such as Apple, Walmart, and McDonalds. That’s likely why the most widely held stocks on the S&P 500 rarely change from year-to-year. Investors buy what they know.

This type of thinking can also be location dependent. For example, the Pro Market Advisors said when they present in Seattle the participants are more likely to have Starbucks, Amazon, Costco, and Microsoft in their portfolios – all companies headquartered in Seattle and area. Meanwhile, investors who live in Calgary or Houston are more likely to have oil & gas stocks in their portfolios, while Silicon Valley residents flock toward Facebook, Google, and Apple. You get the idea.

Buying what you know is not necessarily a bad thing, the experts said, but it can be especially dangerous when you try to equate expertise in your particular field to expertise in the stock itself.

Defining objectives

Stock selection starts with defining your objectives and while it’s easy to generalize and say we all want to make money, there is some universal portfolio objectives:

1. Profit vs. Loss
2. Efficient use of time vs. waste of time
3. Systematic approach vs. “emotional gut feel” approach
4. Consistent repeatable returns vs. inconsistent randomized returns

Digging deeper the Pro Market advisors asked participants to share their portfolio goals (multiple answers were given):

• 83 percent said income generation
• 55 percent said growth via price appreciation
• 44 percent said do more with their money even if there are risks
• 32 percent said conservation of capital
• 16 percent said entertainment, mental exercise, and financial challenge

Stock screening

Next we learned about stock screening and how to narrow down your selection from the 10,000+ stocks listed on North American exchanges to a more useful grouping of 30-150 stocks that meet your criteria.

We looked at basic screening criteria such as price range, market capitalization, sector or industry, market index, relative performance vs. benchmark or index, and country of origin.

Then we looked at fundamental screening criteria. This includes familiar metrics like P/E ratio, earnings growth, dividend yield, dividend growth rate, debt ratio, and sales growth.

Once you’ve identified your screening criteria you can filter your stock selection down to a manageable list of companies to research further and decide whether to invest.

Entry point

The course then took a technical turn (no pun intended) and explained various stock entry points based on technical and fundamental analysis. The Pro Market advisors looked at stock price movements in bull, bear, and range-bound markets and offered suggestions on when to enter and exit a trade.

This information might have been too complicated for the novice investor but it was interesting nonetheless and certainly useful advice for more active traders.

Wrapping up

I enjoyed the stock selection webinar and found the information to be useful and informative. We’re not born knowing how to invest and so it’s important to educate ourselves along the way to becoming successful investors.

This boot camp was in webinar format but rather than just looking at slides the presenters keep it interactive by engaging participants through surveys and quizzes throughout the session. There’s even a follow-up session later in the week to test your knowledge and answer any questions from the participants.

Check out the ongoing education resources, including more videos and webinars, among other education events, at Scotia iTRADE U to become a more confident DIY investor.

This post has been brought to you in partnership with Scotia iTRADE. All thoughts and opinions are my own and do not necessarily reflect the views of Scotia iTRADE.


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