How to use this service effectively

Let us start by recognising that there are three main influences that govern the day-to-day prices of shares:

1. The overall share market cycle which affects all share prices to a greater or lesser extent and which can be taken advantage of if you follow ShareFinder's Overall Market Strategy recommendations.
2. The relatively short-term price cycle of the shares themselves. This is usually governed by investors' perceptions of events that are likely to have a bearing upon the profitability of individual companies. These can be taken advantage of by following ShareFinder's individual share strategy recommendations.
3. The long-term profit growth trend of each company which is gauged by the analysis of balance sheet statistics. Hopefully, in the case of blue chip shares this cycle might run steadily upwards for ten years or more. In the end, however, most of these top performers settle down into a more comfortable sort of middle aged complacency during which their profit growths tends to slow. Long before that happens, the astute investor will want to switch to another, more youthful company that has reared itself above the ranks. Your guide in this case will be ShareFinder's Index of Value for the prime objective of a long-term investor should always be to concentrate his portfolio in those shares which enjoy the highest Index of Value.

How to best combine these three observations requires that you, the investor, carefully consider your own investment objectives. You need to consider first of all whether you are by nature a risk-taker or a cautious conservative. Also you need to consider whether you have the time and the inclination to stay on top of your investments on a daily basis.

If you are a risk-taker who is prepared to buy and sell on an almost daily basis, then the route for you to follow is short-term trading where the performance statistics of our ShareFinder Trader indicate that after paying tax on your trading gains it is still possible to make around 210 percent a year on your money.

If, on the other hand you dislike risk but are not averse to the daily task of monitoring your portfolio, you would either need to have your own copy of our ShareFinder Trader programme and use it to restrict your trades only to the blue chip category of shares where, in the event of your share purchase not making the anticipated short-term gains, you would still have the fall-back position of being able to convert the transaction to a longer-term hold. You would still be in for a potential 210 percent annual gain but you would on average need a bit more cash to play with than the normal short-term trader. Note that blue chip short-term trades are not distinguished from the rest in the daily E-Mail service. You need the programme itself for such an approach.

Note also that if you elected to convert such a trade to a long-term investment you would be wise to send a note to the Receiver of Revenue telling him that you did so lest at some time in the distant future you be taxed on any capital gain which might arise when you eventually sell such a share.

Alternatively, for those who dislike risk but are prepared to do a reasonable amount of buying and selling, the safer option would be to be guided by either our ShareFinder Royals Management programme or the rather briefer medium-term buy/sell recommendations that we E-Mail out daily to subscribers. If you manage this approach well, then you might expect to achieve something approaching the average gain of 44 percent in an average of 21 weeks which is the optimum return achievable from the Royals system.

Finally, of course, there is the laid-back investor who is happy to have someone point him at a parcel of high quality shares in the expectation of good long-term gains. You might achieve these if you simply bought shares with the highest Index of Value and sat on them. To do this you would need our Royals Management system to list the shares for you, or alternatively you should subscribe to our Prospects monthly investment newsletter where they are periodically listed. Here, provided you bought a portfolio of five shares in the highest descending order of index value at a time when the market overall was just turning upwards after one of its periodic corrections, when in other words, ShareFinder's short-term Overall Strategy report was either Buy or Buy Buy Buy you might sit back and hope for an average annual portfolio gain of 90.55 percent.

Now, in between these approaches, there remains some fine tuning to do. Let us start with the Medium-Term predictions data which is E-Mailed out daily. Readers will note that they are arranged in what appears to be a somewhat haphazard manner. The topmost selection in each list is not necessarily the share with the highest index of value. Nor does it necessarily enjoy the highest predicted gain in the year that lies ahead. So why do we arrange them in this seemingly pointless order? The order is in fact that in which the ShareFinder programme expects that the largest short-term gains will occur.

To understand this fact you need to appreciate that although a share might be significantly underpriced, it might remain so for considerable periods of time. You do not want to buy a share, nomatter how good it's fundamental value, if the market has not woken up to this value. You want to buy it at the point when it is both undervalued and when strong accumulative buying has begun. With these two facts coinciding it is likely that in a very short time a quality share will be restored to its true value and, very likely, will be driven well beyond its true value. In the latter case the ShareFinder programme will begin searching for signs that distribution selling has begun, in which case it will issue a Prepare to Sell signal or, as selling pressure mounts Sell or later a much more urgent Sell Sell Sell message.

The investor who follows this quality share price cycle is in fact a medium-term trader for on average he can expect to buy and sell every 21 weeks: enough to put him within the sights of the Receiver of Revenue if he does it too often.

An alternative approach would be to buy those shares that appear in the buying list which are the most underpriced. These might be a little slower to get off the mark and it is even possible that they might be false starters which tend to lapse back into periods of inertia before they begin to make really powerful price runs. But if you are fortunate they should make even bigger profits for you. Note that every underpriced share that appears in the list is there because there is some accumulative buying pressure occurring. Shares with the greatest volume accumulation pressure and the highest price velocity are the ones that head the list, both these factors must to some extent be present to justify a share being included in the list at all.

Finally, you might opt for those shares within the "to buy" list which have the highest indices of value. Again these might be false starters which tend to lapse back into periods of inertia before they begin to make really powerful price runs, but these are shares that you can afford to hold for great lengths of time. Note that, currently, the share with the highest Index of Value is BOE with 3712.5. The lowest index of value in the Royals list is Guardian with 496.

The highest Blue Chip index is ABI with 484.9 and the lowest is Yabeng with minus 1830. Highest Aristocrat index is Gencor with 3794.45 and the lowest Aristocrat index is Voltex with 597.3. Highest Rising Star is CMH at 586.6 and the lowest is Sable at minus 1020.9.

How to use the strategy signals? The best time to buy long-term investment shares is when the overall medium-term strategy message is Buy or Buy Buy Buy but you can with safety keep on buying throughout the positive signal period of the medium-term strategy messages cycle which begins with Prepare to Buy and ends on Wait. It would, however, be unwise to buy any shares if the Overall Medium-Term strategy message is Prepare to Sell Sell or Sell Sell Sell.

Turning to the individual share-buying/selling messages, there is a subtlety that you need to consider. Share prices seldom rise steadily over long periods. There are normally many days on which the price might fall back a little before buying pressure resumes again. So while the medium-term strategy might remain in the "Buy" mode, the short-term strategy might indicate a negative view. It might even indicate a "Sell" strategy in the short-term. So if you really want to fine-tune your long-term investment purchases, you need to watch the short-term signals in order to be able to buy at the best possible price.

The same thing applies to selling a share which has been held for the long-term. The medium-term strategy might indicate a "Sell" which implies that the share has become overpriced relative to its market fundamentals and that long-term distributive selling pressure has set in. However, in the short-term few shares every experience a straight price fall. Usually they will fall and then recover a bit, fall again and recover again.

Usually on each occasion, however, the peak of each successive recovery on the way down will be a bit lower than the last one. So if you are trying to get out of a share, you will want to try and do so at one of those descending peaks.

Here it is of great value to have our ShareFinder software rather than the E-Mail service alone since the programme creates a forward Fourier projection of the likely price trend over the forthcoming six weeks which is there to guide your short-term buying and selling strategies.

Turning to our daily short-term recommendations, our analysis of a hundred recent consecutive recommendations has made it clear that 93 out of a hundred recommended ShareFinder trades are likely to be profitable. Do, however, note that the likely profit gain or loss predicted by the Trader programme is subject to constant change as market forces change. On average we have found that the price gain is approximately half the figure that was anticipated at the time the initial "Buy" signal was issued. Similarly the anticipated number of days is subject to constant change.

Why give these period and gain predictions at all if they are subject to change? Clearly one is looking for trading situations which are likely to yield the greatest gain in the shortest possible time which is why we list a large number of potential trades each day from which you might make a selection. Note, however, that as in the case of long-term investment selections, the short-term selections are arranged in descending order of likely greatest price activity.

By implication then, trading the share market means that you must remain alert once you have committed your money to a purchase and be ready to close out the transaction if the share price falls backwards once more.

Also important in trading is to note the average number of shares that are traded daily. If this average is only a few hundred, then the share is probably very tightly held and you might have difficulty in both buying them and selling them. So it is best to avoid the low-volume shares.

The value index will in many cases be a zero which indicates that the ShareFinder programme has not been able to determine a quality rating for the share because there is an insufficient balance sheet history. We require a minimum of four years of rising dividends and earnings before we can reliably determine the fundamental value of a share. So where there is a zero you must understand that this is not a share which one would normally want to hold for long-term investment.

The best combination of strategy signals is when the overall short-term market strategy is Prepare to Buy, Buy or Buy Buy Buy and that is combined with an individual share strategy of Prepare to Buy or Buy in which case you might on average hope for a share price gain of 62 percent. With other overall market strategy signals, the average gain comes down to 42 percent.