Jason Martin will be leading a Financial Peace University class located at:

Discovery Church
4400 S. Orange Avenue
Orlando, FL 32806

First Class: Tuesday, Feb. 7th 7:00 – 9:00 pm

Classes for this 13-week course begin Tuesday Feb. 7th 7-9pm (first class is free)

The direct contact for FPU at Discovery Church is Linda Cyr 407-855-3141 X 137
fpu@discoverychurch.org

You can register by going to http://www.daveramsey.com/fpu/home/ and putting in the zip code for Discovery Church which is 32806. Then just register online.

If that is not close to you, then put in your zip code and locate a class near you. We would love for you to be in Jason’s class, but if that is not convenient for you, we encourage you to attend somewhere that is close to you.

Here’s the website for Dave Ramsey who is the writer of the books and materials “Financial Peace University” and “Total Money Makeover”. www.daveramsey.com

If you have any questions about this, please contact Mary at 407-210-3888 or rose@allgenfiancial.com.

1) Stock Selection
There are a couple different schools of thought when it comes to picking stocks. The two basic camps are the 1) Fundamental approach and 2) Technical Analysis. The fundamental approach focuses on various financial ratios, earnings, revenues, etc. in order to determine which companies are fairly or undervalued with regard to their current stock price. Warren Buffet and Peter Lynch are notable fundamental style investors. Technical analysis has a different approach. This approach uses an underlying premise that investor behavior tends to repeat itself and can be traced based on certain stock chart patterns. This technique is not so concerned with the value of the stock but rather with the price movement, volume, industry trend, etc. Charles Dow and William O’Neil are notable technical analysts or investors.

The two different approaches and their underlying premises have created a divide among investing professionals with regard to picking stocks. The purpose here is not to establish one method or approach over another. In fact, there are investors that see the value in somehow incorporating both methods into their investment approach. Needless to say, it is important to familiarize oneself with such approaches and determine which style, if not both, is best suited for ones personality and philosophy on the market. Either way, both styles require extensive studying and research in order to ensure an efficient approach to picking stocks.

2) Portfolio Composition
Once you have chosen a strategy for choosing stocks, it is critical that one has a basic understanding of portfolio dynamics. To coin an old phrase, “Do not put all your eggs in one basket.” This principle in investing is called “Diversification,” and it plays a critical role in the performance of a portfolio. A study conducted by Brinson, Singer and Beebower demonstrated that proper diversification or “asset allocation” accounted for over 90 % of a portfolios return over a 10 year period. However, even this rule needs to be understood as it is often misapplied.

Diversification does not mean holding several different stocks in a portfolio. That is the first step towards diversification. But the follow up to that entails having stocks of different sectors (ie , retail, telecommunication, real estate, etc.), market capitalizations (sizes ie large cap, small cap, etc), and countries (domestic, international, emerging markets, etc). The next step is also determining how much of each is appropriate for one’s level of risk tolerance. Many online risk tolerance questionnaires assist in helping to determine such factors.

3) Discipline, Discipline, Discipline
Once the above factors have been considered and employed, the element of discipline becomes the ultimate determinant of an investor having success. It is important to assess oneself and create an investment approach or strategy that fits one’s style. Once this has been developed, it is critical to implement the strategy with consistency and discipline. This has been the area that has led many to have disappointments in the world of investing. Investment decisions cannot be emotionally based. A consistent, disciplined approach to investing should eliminate the emotion out of investment decisions. But this has not been the case historically. A study by Dalbar showed that the average mutual fund investor attained a 2.57% annual return over a 19 year period while the S&P increased by 12.2% during the same timeframe. A lot of the reasoning behind the findings were attributed to investors getting in and out of the market at the wrong times due to emotionally charged events. Even conservative investors who invested in fixed income (ie bonds) instruments fared poorly. Such investors averaged 4.2% annually versus the long term government bond index that averaged 11.70% during the same time period.

So Should I do this myself?
This becomes the critical question. And the answer truly lies in the ability to commit to the above mentioned elements. Many investors have made the determination to become avid students of the market in order to qualify themselves in an arena where they will compete with institutional experts. However, for those that may not have the time, desire or ability to make such a commitment, a marketplace of financial advisors is available to provide assistance in this area. Of course, choosing the right one is important and should be based on some basic tenets. Here are a few quick questions to ask before hiring an advisor:

1) How long have you been doing this?
Financial Advisors have a high turn over rate when first coming into the industry. A typical rule of thumb is that a financial advisor with at least 5 years experience will probably be around for the long haul.

2) How do you get paid?
Some advisors get paid via commissions while others get paid via fees. There is an extensive debate over which is more advantageous. Typically, the fee based approach tends to be more favorable as such advice may lean towards more objectivity, without the influence of how much commissions are paid.

3) How do I get serviced?
One major complaint in the industry is that many clients get sold a bill of goods when first signing up and then never hear fro their advisor. This is typically true among commission based advisors as such compensation structure is based upon new sales and not ongoing service. Will you be serviced by the advisor, his assistant, some call center? Determine which way feels more comfortable for you.

4) How often do we review my portfolio?
Portfolios should be reviewed annually, at a minimum. But some advisors will provide quarterly reviews.

5) What is your retention rate?
One good indication of how well the advisor performs is the satisfaction of existing clients with the service provided. This is usually marked by clients not leaving.

These are just a few questions that provide some criteria for choosing a financial advisor. Of course, intangible elements come into play such as personality and connection.

The decision to be a “do-it-yourself” investor or use the services of a professional is one that many are facing, especially in light of many baby boomers retiring and having to manage their retirement funds. Which ever decision one decides, plan thoroughly as time is money, and making the wrong decision can be costly. In conclusion, personally assess which approach is right for you, prepare as you move in that direction and happy investing!

About Allgen Financial Services, Inc.
Allgen Financial Services, Inc. is a fee-based retirement and estate planning firm assisting individuals and organizations better manager their assets. Allgen services clients both domestically and internationally. Allgen’s service offerings include: personal retirement planning and investing, employee retirement benefits, estate planning for executives, estate planning for foreign investors, and business succession planning for entrepreneurs.

Written By:
Paul Roldan
Senior Partner at Allgen Financial Services, Inc.
Harvard University Graduate

What is CAN SLIM®?

CAN SLIM® is IBD’s checklist for the seven common characteristics all great performing stocks have before they make their biggest gains. You can significantly reduce your risk and increase returns by using the CAN SLIM® Investment Research Tool as a fact-based performance checklist to evaluate a stock before you buy.

C = Current earnings per share should be up 25% or more and in many cases accelerating in recent quarters. Quarterly sales should also be up 25% or more or accelerating over prior quarters. Learn more…

A = Annual earnings should be up 25% or more in each of the last three years. Annual return on equity should be 17% or more. Learn more…

N = A company should have a new product or service that’s fueling earnings growth. The stock should be emerging from a proper chart pattern and about to make a new high in price. Learn more…

S = Supply and demand. Shares outstanding can be large or small, but trading volume should be big as the stock price increases. Learn more…

L = Leader or laggard? Buy the leading stock in a leading industry. A stock’s Relative Price Strength Rating should be 80 or higher. Learn more…

I = Institutional sponsorship should be increasing. Invest in stocks showing increasing ownership by mutual funds in recent quarters. IBD’s Accumulation/Distribution Rating gauges mutual fund activity in a stock. Learn more…

M = The market indexes, the Dow, S&P 500 and Nasdaq, should be in a confirmed up trend since three out of four stocks follow the market’s overall trend. Learn more…

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

> A simple, clear-cut strategy is to sell after your stock has gained 25%, unless the stock has gone up 20% in just one to three weeks.

> Stock charts are especially helpful in spotting signs of weakness in stocks, often providing clues much earlier than any fundamental indicators show.

> Look for climax runs, exhaustion gaps, failed breakouts, significant violations of the 50-day moving average and other characteristics of a weakening stock.

> Remember to check the overall market. If the market comes under distribution and weakens, your stocks will have a hard time making any further advances.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

* The first sell rule is to get rid of any stock that falls 8% below your purchase price.

* It’s critical to follow this loss-cutting rule regardless of how highly you value a stock. Personal opinions get in the way of smart selling decisions.

* The larger the loss, the higher the recovery you need to get back to the break-even level. (A 50% loss on a $100 stock, for example, requires a 100% gain to get back to $100.)

* Strong stocks sometimes initially retreat close to their buy point (as determined by the stock’s chart pattern). This doesn’t necessarily mean you have to sell, unless the stock goes 8% below the purchase price.

* Avoid making sell decisions based on tax concerns or commission rates.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

* Earnings: The Indispensable Element Of Great Stocks

The single most important gauge of a stock’s potential is its earnings growth.

* Sales, Profit Margins, Return On Equity

These three fundamental factors are crucial in evaluating a stock. Learn what they mean.

* Sponsorship: Catching The Stocks The Pros Are Buying

When mutual funds and other professional investors buy certain stocks, the sheer magnitude of their buying power propels stock prices higher.

* The Strongest Industries Often Produce The Best Stocks

Up to half of a stock’s price movement is influenced by the industry it belongs to.

* Leading Stocks Are Leaders For A Reason

How to identify the current stock market leaders. It is these stocks that provide the best opportunities for future gains.

* New Price Highs Mean New Opportunities

When a stock reaches a new high, it doesn’t mean its best days are over. On the contrary, it’s actually a good time to consider buying it.

* New Products, Services Or Management

Astounding stock gains don’t just happen. Great new products, services or management teams are usually the driving force behind the greatest stocks.

* Your Stock Buying Checklist: Sorting Through The Process

Successful investing requires checking all the vital elements of a stock. This checklist tells you what you can’t afford to ignore.

* Chart Patterns Help You Spot The Right Time To Buy, Part I

Charts help paint a picture of investor demand for a stock, revealing important clues about its prospects.

* Chart Patterns Help You Spot The Right Time To Buy, Part II

Any stock worth buying has a recognizable price and volume pattern you can learn to identify.

* You’ve Bought A Stock—Now What?

Buying a good stock is just part of the challenge. Learn how to protect your investment by knowing the best time to hold or sell your stock.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

If all of IBD’s 20 rules are carefully followed (not just the ones you like), your investment results should materially improve:

1. Consider buying stocks with each of the last three years’ earnings up 25%+, return on equity of 17%+ and recent earnings and sales accelerating.

2. Recent quarterly earnings and sales should be up 25% or more.

3. Avoid cheap stocks. Buy higher quality stocks selling $15 a share and higher.

4. Learn how to use charts to see sound bases and exact buy points.

5. Cut every loss when it’s 8% below your cost. Make no exceptions so you can always avoid huge, damaging losses. Never average down in price.

6. Follow selling rules on when to sell and take profit on the way up.

7. Buy when market indexes are in an uptrend. Reduce investments and raise cash when general market indexes show five or more days of volume distribution.

8. Read IBD’s Investor’s Corner and Big Picture columns to learn how to recognize important tops and bottoms in market indexes.

9. Buy stocks with a Composite Rating of 90 or more and a Relative Price Strength Rating of 85 or higher in the IBD SmartSelect® Corporate Ratings.

10. Pick companies with management ownership of stock.

11. Buy mostly in the top six broad industry sectors in IBD’s New High List.

12. Select stocks with increasing institutional sponsorship in recent quarters.

13. Current quarterly after-tax profit margins should be improving, near their peak and among the best in the stock’s industry

14. Don’t buy because of dividends or P-E ratios.

15. Pick companies with a superior new product or service.

16. Invest mainly in entrepreneurial New America companies. Pay close attention to those with an IPO in the past 8 years.

17. Check into companies buying back 5% to 10% of their stock and those with new management.

18. Don’t try to bottom guess or buy on the way down. Never argue with the market. Forget your pride and ego.

19. Find out if the market currently favors big-cap or small-cap stocks.

20. Do a post-analysis of all your buys and sells. Post on charts where you bought and sold each stock. Evaluate and develop rules to correct your major past mistakes.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

Now that we know what a swing move looks like let’s look at how to apply a swing trade. First let’s look at the long side. You need to look for a strong upward move followed by a retracement that retraces 1/3 to 1/2 of the previous move. Then, once the retracement appears that it is reversing and going back higher place a buy order. Once you’re in the postion place a sell stop below the previous lows of the retracement to protect yourself on the down-side. Look at the following illistration:

For a short trade you need to look for a strong downward move followed by a retracement that retraces 1/3 to 1/2 of the previous move. Then, once the retracement appears that it is reversing and going back lower place a sell short order. Once you’re in the postion place a buy stop above the previous highs of the retracement to protect yourself on the up-side. Look at the following illistration:

Swing trading is simple and effective! You can also use swing moves to come up with up or down price targets for the next move in the stock (reference the previous blog titled “Dertmining Price Targets”).

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

When looking to enter a short position I look for three things a down-trending market, a negative sector and a stock that has formed a base (consolidation area) near it’s lows, then I wait for a breakdown of that base at which time I would enter my short position. If you missed the breakdown and the stock makes a sharp move downward, then DO NOT chase the stock and short it when it is extended to the downside this would leave you with an extremely risky postion. Rather, wait for a move back up to the breakout point or at least a move back up into a short-term moving average. Then, look to enter your short once it bounces off that area and starts to head back down. Once you place your short position look to place your buy stop (for protection) above a near by resistance area which usually means the most recent high or you could use a moving average, better yet, place your stop above a high and above a moving average, but make sure it’s not too far above where you entered the postion. My personal limit is 10% away from my entry price. Click the example below to see how the strategy works. The initial short and stop is where I initially entered the position from a breakdown of a base and where I initially placed the stop. The secondary stops are where I moved my stops down, once the position moved down, in order to protect my gains. “Covered” is where I exited the position because my buy stop was triggered.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

Let’s start with the Head & Shoulders Pattern: To be precise a bullish Head & Shoulders pattern is called a bottom-reversal Head & Shoulders and is inverted from the top reversal head and shoulders. To calculate your price target you take the difference between the bottom of the head and the neck line. Once you come up with that number you add it to the neckline to come up with an upside price target.

The next set of patterns you can use to determine price targets are triangles. There are three types of triangles; Ascending, Descending and Symetrical triangles. The way you determine the price targets are the same for each triangle. You take the distance of the apex of the triangles and add it to the breakout point from the traingle to determine your targets. For shorts you would subtract the distance of the apex to the breakdown. To study further click on the links above as stockcharts.com gives great examples.

The third pattern I want to discuss on how to determine price targets is the Rectangle. Determining the price target for the rectangle is relatively simple. You take the difference between the top and bottom trendlines and add to the breakout for longs or subtract from the breakdown for shorts.

The last targeting method is the swing trade or sometimes called an A,B,C pattern because there are three parts to the pattern. I will only focus on the long side and on how to use this pattern to come up with a target, as I could write an entire blog on swing trading alone. The basic pattern includes the first up move (A), followed by a pullback (B) (this pullback can not go lower than the start of A), then a second leg higher (C). To come up with the upside target you would take the distance of the (A) move and add it to the bottom of the pullback (B). See example as it is better understood visually…
For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com