Here is one way you can pick your next stock.

Links to sources will be at the bottom.

First off I want to say that I am not a financial professional, and am not responsible for any of the readers actions, losses, or gains.  This is merely an explanation of one way that I read to pick a stock.  These types of ideas are all over the web.  This is not an end all be all way.

I thought to write this after reading the book “Choose Yourself” by James Altucher[1].  There is one chapter where he gives this idea, and I’m just expanding on it.  Again, this is an idea, and he says anyone is free to use the idea in his book, so I’m going to use it.

With that said let’s begin.  Every major investment company has to file a report every quarter so that the government can collect taxes, regulate, and keep an eye on them. These reports usually tell what stocks a company bought or sold. I will use Warren Buffett’s Berkshire Hathaway[2] for this example.  These can usually be found by going to http://www.bing.com and typing in “<big company name here> <q1, q2, q3, or q4> <insert year> SEC 13F report.” We’ll use Q3 2014 for an example [3]

Basically what that report tell you is that Berkshire Hathaway bought x shares of y company during q#.  So one quarter would be 3 months.  So JanFebMar, AprMayJune, JulyAugSep, OctNovDec.  After seeing that they buy a company, you can take a look at the stocks chart by going to bing.com and typing in a companies ticker symbol, let’s use DTV (directtv) as an example taken from Q3 2014 13F report.  One will see that between July-Sept, there is a range of prices.  To be VERY SAFE, it’s probably important to consider that Buffett probably paid a slightly discounted price on the LOWEST price that was on chart at the time.  Or you can just use the average. This is up to your discretion.

Now all you have to do is keep track of the price that you think they paid (or somehow find out by calling the company to see if they’ll tell you?) and wait for it to get around that price or below in the future.  Of course you could look into the past 13F’s and try to analyze charts from there, to determine what to by today rather than waiting for later.

I’m throwing in a hypothetical situation: DTV was bought somewhere in Q3 2014 for betwen $83.55 and $87.72.  This means that in the future, if you keep track, and DTV falls below that price, you have to use your judgment of whether it’s a good buy or not.  YOU MUST ask yourself questions like, Why did it go down?  Will it go up?  Will it keep going down?  Why are people selling?  Why are people buying?  The company in 2014 may be MUCH different than in 2015, 2016, or even 2014 Q4.  I want to make it VERY clear, again, that this is just one possible way to follow a stock that may help you choose.  Ask yourself questions.  Question this post.  Don’t just follow blindly, but open your eyes to what resources are out there.

To make things easier, there are websites like seekingalpha[4] that keep up with this information regularly so you don’t have to look it up.  You can also go on stockpickr.com[5] for very basic information on buys and sells during the period rather than an analysis.

With all of that said, of course there are criticisms with every “stock picking idea.”  I’m not saying this is a billion dollar secret.  I’m not even saying it’s a great idea.  I’m just simply explaining one possible way.

1)

2) http://www.gurufocus.com/StockBuy.php?GuruName=Warren+Buffett

3)http://www.sec.gov/Archives/edgar/data/1067983/000095012314012218/0000950123-14-012218-index.htm

4)http://seekingalpha.com/article/2690745-tracking-warren-buffetts-berkshire-hathaway-portfolio-q3-2014-update?page=2

5)http://www.stockpickr.com/pro/portfolio/Warren-Buffett/

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