Stock Research Strategies ......Last Updated 01/20/2000, 2/20/2000, 3/26/2000 - 11/18/2000 - 05/16/2001

(Underlined italicized text represents the latest additions to this training guide. Underlined text represents the previous additions to the training guide)

IT IS IMPORTANT TO REALIZE THAT SINCE 1998 THE MARKETS HAVE DRAMATICALLY CHANGED AND ANY INFORMATION THAT YOU COME ACROSS ANYWHERE MUST BE EVALUATED WITH THIS TIME LINE IN MIND. STRATEGIES AND RULES WHICH APPLIED TO THE MARKET PRIOR TO 1998 MAY NOT BE APPLICABLE IN THE CURRENT MARKET, THERE HAVE BEEN TOO MANY CHANGES IN THE WAY STOCKS ARE TRADED AND ACCESS TO MARKETS HAVE CHANGED. SO IF YOU ARE RELYING ON INFORMATION PRIOR TO 1998 YOU WILL RUN A GREAT RISK OF LOSING YOUR MONEY IN THE CURRENT MARKETS. IT IS ABSOLUTELY IMPORTANT THAT YOU RECOGNIZE THAT THE MARKETS AND INVESTMENT OPTIONS ARE GOING THROUGH A MAJOR PERIOD OF FLUX THAT WILL LAST WELL INTO THE NEW MILLENNIUM AND THEREFORE YOU MUST BE PREPARED TO KEEP UP WITH THE CHANGES AND NEW STRATEGIES AS THEY OCCUR.

Remember the key to the Hannaian system of stock research is Intellectual Property acquisition. your goal is to acquire bits and pieces, if not the entire piece of valuable intellectual property. Our trading and investment strategies are designed specifically to accomplish this goal either through private or public investments. The following information deals specifically with public transactions.

Part 1. General Research.
When researching public companies & securities realize there are many ways to reach the same goal. However your research process should cover two basic levels of research principles:

A. First you must identify potentially valuable companies. We refer to this step as "The Identification or I.D. Phase"
B. Next you must fully research them. We refer to this as the "Acquisition Phase".

In the I.D. Phase the goal is to initially find issues that may have merit. There are generally five ways we use to initially identify such stocks.

1. Review and closely follow the stocks and criteria listed in the HIPS Research Report.
2. Use stock screens, which can be accessed from the research Tools Page to enter in specific criteria you desire to search for. e.g. all stocks under $2, in the computer software security sector. You can get pretty specific with stock screens. Several are listed on the Stock research tools page some do a better job than others. One of our favorites is the stock screen at www.wsrn.com
3. There are various sites around the Internet that provide information on stock picks. We refer to these as "Tip Sheet" sites. As you find these bookmark your favorites and visit them regularly. Remember for our system the ones that cover small priced issues and technology stocks are the best. We are developing an organized list of these sites for your use. Many of them can be accessed form our Stock Research Tools page. Try to stay away from sites or services which are paid to hype or advertise stocks.
4. There are many message boards and chat rooms on the Internet which discuss stocks. Be extra careful about the advice you get here. However, many times these services will provide valuable initial picks in addition to research information to be used in the Acquisition phase. Many times these message Boards will reveal information from individuals who are very familiar with the management and other aspects of the company which is not otherwise widely available. Always remember that these boards are susceptible to people illegally pumping up stocks, so do not buy into a stock just because it was recommended here. Our recommendation is to regularly visit the Yahoo, Raging Bull, and Quicken message boards.
5. Regularly searching the news in the sectors you are interested in will many times identify general trends and sectors which you may want to concentrate your initial efforts in. Your general knowledge of what is happening particularly in the technology, software, telecommunications, wireless, broadband, computer, and Internet sectors is very important at this time. Regularly review the hot sectors identified in the "Sector Updates" area of the H.I.P.S. focus page. You should consistently search the News sources in these areas. There are many News sources which cover these areas as they are related to the stock market. When researching the news look for companies in industries which are currently in the news or likely to be newsworthy in the future. Remember that in our media driven economy everything moves with media attention, stocks prices are no different. This is especially important for short term trades. In particular most investors come from the "Dumb Money" sector, they don't research properly and depend heavily on any broker or other advice they come across. Most importantly they buy primarily on news. This "Dumb Money" can have a significant affect on short term price moves. Remember however if the stock is not fundamentally sound or if the HIPS criteria do not indicate that it is a long term buy and hold, you must be ready to take profits quickly if the stock has no other basis in strength other than news.

The Acquisition Phase of your research is used to provide in depth research into a company and to refine your focus and following of issues you may buy or sell. The key to this phase is to closely follow the criteria used in the HIPS Research System. You will evaluate each identified stock on the basis of these criteria. It may take some time to adequately complete this phase and in some respects it is always ongoing, because even if you purchase the issue, you must continue to research and follow it to provide the necessary information needed to maximize your profits in it. A good general research site to begin with is www.wsrn.com

Part 2. Rules To Remember.

The following are some research rules used to effectively find appropriate securities to trade and invest in when using the HIPS Research System.:

1. Read carefully and keep in mind the information in the section "Private versus Public Investments".

2. Read carefully and follow the information in the section "Understanding Value in Intellectual Properties".

3. Follow closely and keep updated to the information and stock focus in the Hannaian Stock Research Center, and the Hannaian Finance & Investments Website, Newsletters and the "Playing The Right Ball Game" broadcast.. You will find this information to be invaluable. Most of the information is designed specifically for the operation of our intellectual property acquisition business and in its context cannot be found anywhere else. Be thoroughly familiar with the criteria used HIPS Report and explained in the HIPS glossary and get proficient at evaluating stocks using these criteria.. Understand and regularly follow the "Sector Updates" section.

4. Follow the rules of the "Stock Investment Tool Kit" to identify companies which are intellectual property rich and otherwise meet your trading and investment criteria.

5. Become familiar with and stay abreast of the "Hannaian Stock Tools Research Listings". This listing is constantly updated with the latest and best trading & investment research tools on the Internet.

6. Utilize your computer and Internet connection as your first line of research.

7. Be prepared to follow up on your research with non-Internet sources. You may even need to call the company for direct information, or to call their competitors. researching the Company directly is an important part of your research and one which the Network is designed to assist in. You may also contact the Hannaian company for contact names of Network members in the geographical area where a company being researched is located. These network members who have agreed to perform on site inspections or research on their local companies will be happy to assist in giving you valuable local input on such companies. You want information about how the company is performing, how it treats its employees, what is its local reputation, what do the locals say about its competitors, what about the quality and character of its products, its management, its facilities etc. What does the local newspapers, particularly the business newspapers say about it. The local better business bureau and chamber of commerce involvement. The onsite local evaluation of small emerging companies is particularly important since information on them may not be widely available..

8. Run stock screens to discover the companies with the criteria you are search for. Screens allow you to search for stocks which meet certain criteria. There are many screens avaialable on the Internet and in stand alone programs, they are all different and each have their strengths and weaknesses. Different screens should be used for particular purposes. One good general screening idea is to start with the most inexpensive stock issues first and work up. You must periodically revisit these stocks by rescreening preferably on a biweekly basis. You can find the screening tools we recommend on our Stock Tools Research Listings.

9. Utilize one of the free stock tracking tools we list to keep constant track of your portfolio and other stocks you are following. You may need to use two or three different tools to access all of the features you need since each tool may have unique strengths e.g., real time quotes, standalone ticker bar that's always visible on your screen, minute by minute tracking of stock purchases or sales etc. Our recommendation at this time is MedVed Quote Tracker available for download free from our Stock Research Tools page. Another good tracker is Internet Trader, also available from the Stock research Tools page. One interesting feature of Internet Trader is its ability to screen stocks, do so automatically over time and configure the reports as you perfer the colums to be organized. This makes it an excellent research tool in additionn to a good stock tracker. One tip to keep in mind when using its Global Scan screening feature is that it will not show all of the stocks it pulls up on a screen if there is a large amount. however if you print the report it will print out all of them.

10. Establish several accounts with online discount brokers if possible. This gives you access to several sources of proprietary research and research tools and methods. You can research the various online brokers at or Stock Research Tools page. If you want to participate in market making activities and professional short term trading you should get an account with a brokerage service like The Executioner in order to participate at this level.

11. Make sure that the brokers you select meet as much of the following criteria as possible;

a. Allow trading without extra costs on OTC:BBB stocks, International stocks, and penny stocks
b. Provide check writing privileges to access the cash in the account
c. Pay a good rate of interest on the cash balance in the account.
d. Allow phone trades at a reasonable price or at no difference to Internet placed trades.
e. Allow access to trade Initial Public Offerings (IPOs).
f. Have adequate Internet and phone access during times of heavy trading.
g. Provide real time quote access.
h. Provide margin accounts at low rates.
i. Provide the ability to trade options.
j. Provide NASDAQ level II quotes

12. Follow the news and message boards on the stocks you are researching.

13. Look for stocks with criteria as identified in the Stock Tool Kit.

14. Always use limit orders to purchase stock rather than market orders.

15. Try not to buy or trade stock at the open of trading wait until the middle of the day or at the end of the day if possible.

16. Follow the stocks in real time rather than delayed time.

17. Have all account and trading information handy at all times.

18. Have access to a computer with the stock tracking software running throughout the trading hours if possible.

19. Watch sharp spikes in the price of a stock and attempt to take profits just before the peak or before it inevitably falls down again.

20. Carefully study the chart patterns of stocks in general and ones you intend to buy.

21. Don't be greedy. Start to consider taking some profits after a stock has accumulated more than a 25% gain, but try and understand why the price is increasing before doing so. Carefully watch stocks which have moved from immature status to a mature status. This is indicated on the HIPS report by highlighting in yellow. Stocks which make this change may start to behave differently and can run far up in price quickly. Do not be too quick to sell these stocks.

22. Be more ready to take some profits in stocks which rise very quickly or which tend to be very volatile.

23. Don't be too quick to sell because of fluctuations in price. Remember the many market variables may transiently affect prices but over the longer run if the criteria you picked the stock for in the first place is still intact, holding the stock probably remains wise.

24. In researching the fundamentals of a company look at the details of the financial statements, SEC filings, natrional and local area news to determine the following: Ability to generate cash flow through total revenue derived from their basic business operations; licensing revenue from their intellectual property holdings; ability to obtain additional funding and credit; dependence on market acceptance of their products; dependence on a limited number of customers; lack of significant sales and distribution channels; ability to timely develop new products; business conditions and growth in their industry and the general economy; . competitive factors, such as rival providers of similar products, technology or intellectual properties; price pressures; compatibility of the products with a wide variety of configurations and other products; reliance on sole source contract manufacturers and component suppliers; dependence on a limited number of key personnel; rapidity of technological changes in the company and industry.

25. Look at the track record of the company, how long has it been in business, how many employees does it have, what is the institutional interest and investment in it, what was its financial performance in the past year, what is its market capitalization, and is it actually making profits. Remember however that solid fundamentals are not essential to growth in stock price, many other things influence the price of a stock (e.g. remember the first Internet stocks).

26. Remember the "Growth Without Earnings" priniciple and benefits which publicly traded companies have over private companies. In other words as long as you are satisfied with reaping your rewards from the sale of stock when the price of the shares rise, rather than dependig on dividend payments when a company earns a profit, your dependence on the fundamentals of the company does not have to be absolute. In fact most of the money made in securities trading and investment oriented businesses come from the growth in stock prices rather than dividends from profits earned in the operation of the business. This means that your emphasis should be on finding companies which primarily provide stock price growth. Companies which pay dividends usually have slower growth even though these companies are usually profitable business operations, since they must be to declare and pay dividends.

27. Remember you must research the competitors of any company you intend to buy into.

28. Look for companies that Wall Street and established analysts have not yet discovered or which have not yet become fashionable, or which have been dropped from the popular lists. Remember that the vast majority of investors do not do their homework and will generally follow the herd. They blindly follow what's in the news and what seems to be in fashion with Wall Street and other people. By the time a stock becomes fashionable it is generally too late to profit from it because the herd has already taken it to premium prices. The 5-10% of investors who truly do their homework and who are truly successful try to find companies which are just emerging with good fundamentals, low debt, good management. And most importantly which Wall Street has not yet discovered. Remember at one time Microsoft, Dell and all of the major public companies today were small emerging companies. The good researchers job s to discover these companies before they become popular in the market. This is the reason you must operate your trading and investments as a business. This is how you distinguish your operation from the herd of investors simply pouring their money into the markets without proper research. Remember the key to your success is research, research, more research, and close, close, and consistent following, and watching your money. There really is no better solution.

29. Look for stocks with small outstanding stock floats, since these are more likely to move up more quickly with less trading volume. But remember they can also move down more quickly. These stocks can also be good for trading as they tend to be volatile, so they must be watched closely.

30. A general rule, buy stocks when they are unpopular, sell stocks when they are popular.

31. Develop a consultant source of experts in new technologies, software development, computer programming etc. You may need to contact members of this group from time to time to analyse technical information and give insight you need to complete your research. These individuals may be friends, family or anyone you meet who be have technical knowledge about the kind of technologies we generally invest in. They will generally be happy to help you because of your interest in things they do for a living. Remember that one of the advantages of the Network is that there may be affiliates who are experts in the areas you are researching contact Hannaian to find these individuals.

32. Forward the names and other information on any stock you feel is worthy of a full HIPS evaluation, or which may you need additional help researching to the Hannaian Company. Use email whenever possible to HIPS@hannaian.com. The issue will be evaluated and a report sent back to you as time allows. If the stock meets the criteria for listing in the official HIPS Research Report it will be added to coverage for all members of the Network to view. This is an important concept in our networking process of sharing information and research in order to reduce the duplication of efforts and expand the opportunities for success.

33. Follow Money Flow Indicators......Following the charts on money flow into stocks and sectors will provide an important indicator into the potential for price accumulation. In addition on a short term trading basis the following of large block trades will give some indication of where a stock may be going in the short run. Such large block trades particularly in small priced issues and OTC:BB issues are significant indicators of where the stock price is headed. Obviously an increase in money flow indicates a rise in price, and a decrease in money flow indicates a fall in price. There are several charting sites and programs that provide such money flow indicators and real time Time & Sales information.

34. An important research TIP is to visit the OTCBB.com site daily to review what stocks are being added to the OTCBB, which ones are being relisted and delisted. This can easily be done by clicking on the OTCBB link in QuickTrader on when using WebLine and then on the item "Today's Changes" on the main menu on the OTCBB.com site. If you check it on most days for example you will see that several stocks that moved to the active listings and ones that got rid of their fifth letter "E" responded well to the change in their status and immediately gained some in price. This is a very important research technique to use to get some quick profits on the change in status of these stocks. Likewise you will find stocks that are about to be delisted and which will drop in price and if you are holding them you can get out and save some money. In doing this research if you find HIPS stocks on these change lists please report them on WebLine as soon as possible. In addition, by clicking on the menu item "Daily List" you can search for "Anticipated Additions and Deletions" This is another important research tool to find moves before they happen and before most of the market, who may not be as research savvy as you are.

35. In review, remember this "Points of Alert Checklist" for initially identifying your stock picks, look for:

1. Strong Intellectual Property holdings
2. Hot sectors
3. Good news
4. Companies whose stock price has been beaten down
5. High Competitive Rating
6. Low Market Notice Rating
7. Favourable Technical and Behavioral Analysis of the graphical charts for potentially high "Trading Performance".
8. Small float
9. Significant sales and/or licensing revenue generation
10. Significant amount of cash on hand available
11. Large percentage of instituional investment & ownership
12. Type and quality of institutional investors related to core business (e.g. Microsft or Intel as an investor in a micro chip designer or manufacturer)
13. Important business partners and relationships
14. Low priced stocks with large market capitalization.
15. Low priced stocks trading on the major markets, NasdaqNM, NYSE, AMEX.
16. High insider stock ownership

Click here to  Download The HIPS Stock Research Log ...used to facilitate the researching of stocks
For Further details of the Hannaian Business network and its associated business opportunities visit the Business Opportunities Section of the Hannaian Publishing Website at http://www.hannaian.com/distribr.htm