Anybody can beat the stock market! Forget about the brokers, high-tech analysts, fortune tellers, and palm readers. The first lesson is that you don't need any complex mathematical or astrological theorems to make your fortune in the stock market. All you need is common sense and a basic understanding of the Three P's: Price, P/E ratio (price/earnings), and Past performance. Of course, there are numbers involved, but these numbers are very easy to understand and one need not acquire an MBA to decipher them! Here, we shall begin a step-by-step approach to learning the basic tools of finding, analyzing, and most importantly, investing in the next Microsoft.

1.) Full-Service Firms

Full-service brokerage firms are the large firms with thousands of brokers and traders running around the office trying to look busy. Some of the more lucrative and well-known firms are Merrill Lynch, Morgan Stanley, Prudential, Bear Stearns, or A.G. Edwards. The other full-service houses also offer investment advice and research recommendations, but their returns are often not as high as their reputations. However, the full-service firms do charge an arm, two legs, and a big toe for these services (no pay, no gain).

Although full-service firms provide research and recommendations, hefty commission charges can substantially cut into any profits you generate. Furthermore, the best interest of the broker sometimes conflicts with the investor. Large brokerage firms often have a favorite stock they would like to sell or recommend. If the firm has a large position in the stock, they stand to gain by selling at a markup. Hence, the job of the broker is to sell any stock from ABC to XYZ, especially stocks on the firm's selected list. Furthermore, the more trades the broker makes, the higher the ego and the higher the commission. In any case, brokers, especially the more charming ones, can persuade small investors to trade more, exposing them to more risk. Known as "churning" an account, this type of hyper-active trading can be costly.

Okay, not all brokers are unethical and greedy (the older ones are either bald or in jail, or worse, BOTH) and not all full-service firms are bad. Some firms provide decent returns, good service, and nice newsletters. However, just be aware of the dangers involved, such as high commissions and an overly friendly broker that sells life insurance part-time.

2.) Internet or Discount Service Firms

With the research skills provided in this manual, you can do just as well as the big bullies of investment, the full-service firms. This is why you should consider opening an account with a discount brokerage firm, which are internet firms today in most cases. Although I hate free advertising, some excellent and well-established firms are Datek, Webtrade, Waterhouse, Olde, and Quick and Reilly. Other decent firms are National Discount and Lombard.

Discount brokerages can save you over 40- 70% in commissions depending on the prices and types of stocks you buy. They do not, however, provide any research or investment advice. Of course, there is also no pressuring, wise-cracking salesperson telling you to buy stock in ToeJam Co. because they just invented the automatic toenail clipper (they can be quite persuasive). Okay, enough broker-bashing. Now the most important part.

3.) Account, Options, Margin

To open an account, call the brokerage firm (if you have read this manual, it should be a discount firm) and ask for an application. Before you fill it out and send it off, here are just a few basic tips to setting up your account:

Open a regular account and let the firm hold the stock for you. This means that any stock you buy will be held in "street name", that is, in the name of the firm. This way, no stock certificates will be sent to you, and possibly eaten by the dog.

Also, DO NOT open an option account unless you go to Las Vegas and always win. Playing options is like playing the lottery except that you can lose much more than one dollar. Options are a gamble and the odds are not in your favor (unless you have information about a company that the rest of us mortals do not have).

On the other hand, margin accounts may be opened for those who like to gamble part- time. Investors may essentially borrow money from the brokerage house to purchase stocks at a specified interest rate. However, you still have to put up at least 50% of the total cost of the purchase and the firm lends the balance using the stock as collateral. This can be rewarding when the stock rises, but when the stock falls a certain amount, you will be required to put up more money in what is known as a margin call. If you do open a margin account, be sensible when using it and don't abuse it. When the next stock market crash arrives, we would rather not see our beloved readers jumping out the window due to margin calls.

Before we begin your formal combat training, you need to know two rules that can never be broken. For your sake and ours, heed our warning. DO NOT break these two commandments to investing or you shall be forever condemned to being penniless.

1.) MoneyPang Rule 1: Do not be fooled by the idiot in disguise

Never, ever listen to anyone's advice about buying stocks before checking out the story for yourself. This is the golden MoneyPang's rule. For example, say some idiot tells you about this great biotechnology company that has just invented the most technologically advanced hair growth formula for babies and bald eagles. The person says, "This is going to be a hit, you MUST buy the stock." What should you do? You should DEFINITELY NOT buy the stock.

Many times this idiot will be in disguise and get you when you least expect it. She or he could be a stranger, a broker, or even your grandmother; but you must stand your ground and fight the urge to buy. We do not care if it is the beloved community priest, do not buy the stock without checking.

2.) MoneyPang Rule 2: PreSearch First

Why shouldn't you buy the stock? Well, in many cases, people are just misinformed or they have just read about the stock in the newspaper. Either way, the stock has already been bid up (or down) and you buy with the stock at a high casualty rate. Now, if the story sounds truly convincing, then go out and do what we at MoneyPang's call, a PRESEARCH. Whenever, wherever, and however you find a stock that you want to buy, ALWAYS research the stock BEFORE buying. In other words, NEVER, NEVER, NEVER and did we mention NEVER do your research AFTER buying the stock. That's why it's called a PRE-SEARCH. Get it? Then, if after presearching the stock using the MoneyPang's methods described in this guide, the stock still looks too sexy, go for it (the stock)!

Now for the main course. There are literally thousands of companies out there competing for your hard-earned dollar. How can YOU find the next super-stock and where do you begin? Well, it all begins with life. In life, simplicity is felicity. So why not apply this approach to

picking stocks? For the amateur investor, the best initial strategy is to keep it simple and work

your way to the top. By simplicity, we mean that everyone likes things that are familiar to them, be it people, such as your relatives, or objects, such as your favorite book. Apply this same train of thought to stocks and you will be riding on the right thought track. If Peter Lynch, the master of simple investing could do it, why can't you?

First, let us explain what is meant by familiarity. This is the easiest and most enjoyable part. Look around you, where did you shop and what items did you buy? Was the store crowded with customers? Did you go to the GAP, LIMITED, or WAL-MART? What do you (or your kids, if any) like to wear? Perhaps they wear Nike shoes, Starter sportswear, or Fossil watches.

Here's one example that you should all know. When Snapple IPOed and its stock soared higher than that Hubble Telescope thing. All the hype has cooled down and the stock came back to reality. Why did the stock soar so high the first time around? Well, because everyone drinks Snapple and seems to like it. The brand name is well known by both consumers and stockbrokers, and everyone made a lot of money. On the other hand, if you bought when the stock hit its high, you may not have been so lucky. Anyway, you get the picture. The stocks like Microsoft, K-Mart, Wal-Mart, Sportmart, and any "mart" you can think of are here for YOU to discover. The great companies are all around you if you keep your eyes and ears open.

If you are not a hermit, YOU can find the great companies. The best place to start is with YOURSELF. You would be quite surprised to learn how many PUBLIC companies you ALREADY heard of. To get to know yourself better and find the next superstock, here are questions to ask yourself and possible answers.

Yes, it is very easy to find the next superstock. Just in case you still have doubts, here is one last example that comes from one of our employees. She opened an account with Waterhouse Securities, a discount brokerage firm (of course!) a while ago. While trading, she realized that the firm provided good services. As the case with any of our employees, she said, "Hmmm? I wonder if this company is public?" After a good PRESEARCH, she found out that Waterhouse was not only public, but had great earnings growth as well. She bought the stock and it zoomed from 22 to over 30 in a matter of weeks. By investing in the very brokerage firm that handled her account, she earned all her commissions back and more! Of course, she was not the only one that gained, you could have too! But don't worry if you missed this opportunity because there are thousands more out there!

2.) More shopping.

Now let's get back to your shopping spree. How can you beat the brokers and analysts just by shopping? Well, while these computer geeks are busy comparing who has a bigger hard-drive, you will be seeing the real action right there in the store. Find a company that makes or sells goods or services that we as consumers want to buy more of each year. Further, when your best friend says, "Wow! That's the most beautiful nose-hair clipper I have ever seen! Where did you get it?", a light bulb should go off in your head and it's PRESEARCH time. Remember, the brokers, traders, and portfolio managers just sit at their desk and look at numbers all day. They expose themselves to dangerously high levels of computer radiation and may never catch the new trends in the store. As an average investor, consumer, or student you can look around and see what's hot and what's not. Everyone targets their goods toward the average consumer, YOU.

The sample questions and answers from the previous page may seem simple, but they are very important. Questions such as these will force you to think about the wealth of knowledge YOU have. Many of the great stocks can be found this way. As a consumer, shopping can be both fun AND lucrative if you stay awake and on your toes. All you need is common sense and an awareness of good and new products that you or your friends enjoy.

Okay, but what if you have no friends, you don't shop, and you just can't think of any familiar companies? In other words, you are a loser that wants to be a WINNER. Well, do not fear because MoneyPang's will show you where to find those great new companies anyway. And later on, people will BEG YOU to be friends and you can blow them off. Just keep reading!

Well, the best way by far is to read, read, and read anything you can get your hands on. The most reliable sources are the Wall Street Journal, Financial Times, New York Times, or any other business magazines such as Financial World, Business Week, Forbes, Fortune... Look for articles that highlight small fast-growing companies that are not widely followed by every broker from here to Mars. Although this is a good starting point to find company names, always do a PRESEARCH before investing. Regardless of how great the company sounds in the article, never buy stock based solely on that information (refer to MP Golden rule #1 and #2).

Yes, we know what you are thinking. The very reason that you bought this easy manual is so you could get AWAY from all those long, boring, monotonous, uninteresting business books. Well, MoneyPang's is going to let you in on a great secret! There are magazines about almost anything you can think of: arts & craft, fly fishing, bowling, aaaaanything. Research can be fun. Simply pick up your favorite magazine at the local book store for free and start reading. They usually don't kick you out until after you fall asleep or they close, whichever is sooner (just don't dress like a bum).

You can find trade magazines about ANY industry you have an interest in and want to research. This is actually the BEST way to research stocks if you think about it. The people who publish these magazines know more about the industry than the brokers and the research analysts combined. How? Simple. They work for the magazine because they love what they do! Further, magazines must always feature new companies and products because they need to stay up-to-date for their subscribers. We have one research analyst whom we disguise and send off to the local book store each month. Why? Well, she is in the exploding video game industry, and MoneyPang's wants the most updated information possible.

If you are a parent or college student, you must have played either Mortal Kombat or NBA Jam. Our analyst discovered the company that produced these popular games, Acclaim Entertainment, long before anyone on Wall Street. Another amazing performer was Electronic Arts which almost merged with Broderbund Software, yet another stellar stock. THQI has been another home run. How did she do it? Well, she looks in magazines such as Electronic Gaming Monthly and GamePro to check the ratings on hot new video game companies.

Do the reviewers, who have already played the games, love or hate a specific new game? Which company designed the game? Look for opinion polls. Do the readers like the game and are they buying? These are just some of the questions the magazines can answer.

We have just shown you the quickest and easiest LEGAL way to gain inside information. Many analysts simply look at the income statements and balance sheets on a company. In contrast, magazines introduce you to new companies, company competitors, industry favorites, and most importantly, industry trends. Hence, YOU can pick up the trends and the SUPER companies before the number-crunching analysts. These magazines tell you all about the new opportunities in your particular hobby or industry, and can sometimes be MORE important than the financial statements themselves. Just think of this as the FUN part of the PRESEARCH called FREESEARCH.

5.) Recruit the next super-stock!

Now here is the best reason to visit the nearest job placement office. Forget the job offers, just ask the placement workers which companies are recruiting at both the undergraduate and graduate levels. Companies hiring at the graduate level are preferred because that is when you really know a company is expanding and looking for fresh, new people. If the company is willing to pay the high salaries of new MBA's, the company should have a strong balance sheet. Find the company that is recruiting the most, and you have most likely found a decent stock. Even better, ask for a list of companies that have never recruited before, that is, look for Virgin Recruiters (VR's). Once you have found these VR's, look out! They may be the up and coming stocks you have been waiting for. Some examples are Duff & Phelps (recruited in 1992 and stock ascended to new heights), Advanced Micro Devices (began recruiting at MBA schools in 1992- 1993), and Musicland (lost their recruiting virginity in 1992- 1993 and the stock subsequently rose from 13 to 20). One last example is Dialogic, a telecommunications company. Dialogic was discovered as a VR by MoneyPang's BEFORE the company issued shares to the public in early 1994. Needless to say, the stock soared to NEW HIGHS after the initial public offering. The placement office is good for something after all!

6.) Money Machine Search Summary: Words of Wisdom.

By using any of the five methods above, you can find the bread winner, the one that will

This same philosophy should be applied to stocks, and it takes just as much time or less. Remember, unlike a new toilet seat, stocks cost much more (unless you buy a gold plated seat). Stocks require hundreds to thousands of your hard-earned dollars, yet people spend more time researching toilets than they do for stocks. Granted, sitting on stock certificates may not be as comfortable, but we think the extra time you spend researching stocks will be worth it. Wouldn't you want the most PANG for your buck?

Many people say, "Stocks are way too risky." If you listen to a fast-talking broker or throw darts at the Wall Street Journal, of course playing the stock market will be hazardous to your health. We are not saying that stocks are not risky. BUT, if you do your PRESEARCH and FREESEARCH, the risk is minimized substantially. Now that you are 110% convinced that PRESEARCHING is the way to wealth, MoneyPang's will teach you everything you need to know and more! Let's begin teaching you the PRESEARCH PROCESS!

1.) Is the company a public or private person?

The first and most important step is to determine if the company is public, that is, if the company has been incorporated and has issued shares to the public for purchase. Unlike private companies, public companies have sold stock and are required to disclose financial information. It is easy to find out if a company is public. The library has a substantial collection of resources for company information. Besides, the information is free and the people are quiet. Pester the librarian and ask them for any of the publications on the next page: