Z Market Rules for Trading

Here at Z Market, we're in the process of adapting a process that we can use to trade to make the most amount of successful trades each month. Our initial goal is to make a profit of 3% per week. Over the last number of months of evaluating the market, there have been several important observations made about the way the markets work and how to respond to them. 

Rule 1: Examine P/E Ratios

In "How to Make Money in Stocks" by William J. O'Neil, we find the following quotation that has been very important in coming to some conclusions on purchasing stock trades.  He says that "primary consideration should be given to whether the rate of change in earnings is substantially increasing or decreasing." On the basis of this, it's important to chart the P/E over time of a stock and see how that ratio is faring in consideration to the stock price. As an test of this observation, I'm going to update this post with several of my favorite stocks over the next week. 

As of  9/29/08:

RIMM: 22.6

AAPL: 25

MSFT: 14.4

RIG: 7.6

CHK: unavailable

TRLG: 20.2

WMT: 18.1

TGT: 15.4

GS: 18.3

WB: unavailable

USB: 15.8

BAC: 20.2

GOOG: 28 

YHOO: 25.26