Best stocks in the Investors Business Daily?

TeekaTiwari answered one year ago …

Wow this is a great question. The IBD 100 is a good place to start to find potential movers. But buying stocks blindly off a relative strength list (which is what the IBD 100 is) is not the way to go. There is too much risk that you are buying at the top of the move.

What the IBD 100 will do is give you an idea which sectors are the leaders. It's your first clue of where to start looking. Once you have an idea as to which sectors are the leaders you have to make a determination as to which of those sectors are experiencing a multi year run.

Remember that stock prices are slaves to earnings actual or perceived. One of the greatest things you can do to boost your returns is to invest in sectors experiencing a period of long term above average earnings.

Previous examples of this would include technology stocks from 1982 - 2000. More recent and current examples include oil stocks, industrial metal stocks, agricultural commodities etc...

The best time to buy into a sector experiencing a long term earnings run is when the sector becomes oversold. All sectors will get hit at some point in their long term run. This is when the IBD 100 can help you.

Keep a list of the top performers by sector from the IBD 100. When the sector takes a hit you can go back to your notes. What you then want to do is look at the IBD sector leaders. What you are looking for is the stock that has gone down the least in the sector over a specific time frame. ( three months or six months should be enough)

That will be the diamond in the rough that will have the highest probability of rising when the sector recovers.

What you are looking for is a 15%-20% pull back in the underlying sector.