The Stock Selection Guide* is a paper
form developed by the not-for-profit National Association
of Investors Corporation (NAIC) in the 1950's to aid
individual investors in the fundamental analysis and
selection of stocks. The relatively-simple two-sided
form enables an investor to identify the characteristics
of a growth stock, and plot potential future growth
from the historical trends. The SSG (as it is known)
also helps an investor determine a reasonable value
for the stock, suggesting purchase when the stock is
temporarily on the cheap side of a value assessment.
The SSG is not,
however, a "black
box" analysis tool, one that uses mathematical
formulas to prognosticate the future. It requires an
investor to apply his or her own judgment to many
factors in the analytical process. The SSG can be an
important aid to the individual investor in discovering
those stocks which are most likely to increase in value
over the next five years.
The following tutorial attempts to
de-mystify the Stock Selection Guide, to explain its
components step-by-step, and to point out areas where
an investor's judgment should be carefully applied.
While this tutorial focuses specifically on the SSG,
a special effort has been made to emphasize the tenets
of long-term, growth stock selection that any investor
Computerized tools that perform analysis
of the Stock Selection Guide (such as the Stock Investment
Guide by Churr Software) have greatly simplified the
process. However, tools are no substitute
for sound analysis processes and human judgment. For
this reason, users should understand the SSG well enough
to complete an analysis by hand. This leads to a better
understanding of each section of the SSG and how judgment
affects the outcome of the analysis.
Web Site has more information about NAIC
and the Stock Selection Guide.