Investment Strategies -Cohen Investment Approach.

Cohen Investment Approach.

Source: The Armchair Investor by Bernice Cohen
Criteria:

• Check the fundamentals using Company REFS or Investors Chronicle.
• EPS should be growing by 20% or more.
• A small Market Capitalisation with strong demand favours a rising share price.
• Use technical analysis to help with buy and sell decisions. Buy on a breakout with
high volume after a base-building phase. Look for the 20-day moving average
cutting above the 50-day moving average; both averages moving up and the 200-
day moving average starting to turn up. Wait for the price to close above the
breakout price on two consecutive days before buying. A gap is a positive signal.
• Look for efficient management.
• No Debt and Cash rich is preferable.
• EPS Growth should double over 5 years.
• Consider selling on a profits warning.
• A little institutional support is helpful.
• Look for something new - products, management, or new high.
• Invest when the stock market is moving in a positive direction.
• Sell poor performers quickly.

Market Indicators:
• Look for all indices rising strongly – over 20 points.
• Record each day’s total volume of shares.
• Find the average size of each trade by dividing the total number of shares by the
number of trades done. 17,000+ is busy on the part of private investors. 25,000+
indicates strong institutional activity.
• A sharp setback on low volume suggests that fund managers are not selling.
• Record daily the number of shares making new highs, the numbers making new
lows and the difference between the two. A strong bull market is suggested if
there are over 200 shares making new highs.
• Use the 10-day Test to record the number of days up and the number of days
down in the index e.g. 6/4.

Announcements:

• Check the date for the announcement of results before buying. Check for buying
in the 8-week run-up to the results. Watch out for profit taking before results are
announced.
• Waiting for the results to be announced is a safer course of action.