Investors Business Daily Review
- Value for Investors
- Value for Traders
- Ease of Use (Leaderboard)
- Ease of Use (MarketSmith)
Investors Business Daily is a reputable publication in the world of investing. The company has been around since 1984 and now offers trading platforms built around William O'Neil's "CAN SLIM" trading methodology. In this review, we take a deep dive into the Leaderboard and MarketSmith platforms and provide recommendations for each platforms.
About Investors Business Daily
Investors Business Daily is an online financial news and research publication offering a variety of market resources, educational tools, and platforms. The company was initially founded as a print publication in 1984 by renowned investor, William O’Neil. The publication stood the test of time and eventually made it’s way into the online world. Today, Investors Business Daily is one of the leading market authorities, trusted by millions of visitors around the globe.
Who is William O’Neil and Why Does it Matter?
William O’Neil is an investor, stockbroker, and respected author. Within the stock market community, he is most well-known for his book “How to Make Money in Stocks.” “How to Make Money in Stocks” explains O’Neil’s growth investing strategy in great detail. This strategy is based heavily on the “CAN SLIM” system, which outlines the seven characteristics of top-performing stocks. These characteristics include:
- Current quarterly earnings
- Annual Earnings Growth
- New Products or Services
- Supply and Demand
- Leader or Laggard
- Institutional Sponsorship
- Market Direction
So, why does this matter?
The “CAN SLIM” strategy serves is the methodology behind the premium tools offered by Investors Business Daily. Every savvy investor and trader should be focused on the “why” behind a trading strategy, as blindly following stock picks is a recipe for disaster. Having a basic understanding of IBD’s methodology can help you better understand their stock picks and platform features.
Leaderboard and MarketSmith
Leaderboard and MarketSmith are two of the flagship offerings of Investors Business Daily. These platforms were built with O’Neil’s methodology in mind, and serve as powerful platforms for investors aiming to outperform the market.
If you’re familiar with Day Trade Review, you know we generally focus on trading services over investing services. That said, Leaderboard and MarketSmith both incorporate elements of technical analysis, and we’ve found them to be useful for day trading, swing trading, and investing.
What’s the Difference Between Leaderboard and MarketSmith?
Both platforms are similar and built around the same growth investing strategies. The biggest difference comes down to the type of investor using the platform.
Leaderboard is designed for casual investors who are looking for stock recommendations backed by quality research.
MarketSmith is designed for active investors who prefer to do their own research.
Let’s dive deeper into the features of both platforms so you can decide which one is the better fit for you.
Leaderboard is essentially a stock research service backed by the time-tested strategies of IBD. The IBD team researches the best growth stocks and shares the reports with Leaderboard subscribers. IBD claims that Leaderboard outperformed the S&P 500 by 18% in 2017 (an impressive feat).
Leaderboard can be accessed for either $69/month or $699/year, with the option to start with a 14-day free trial.
At this price point, Leaderboard is ideal for investors of all levels. We recommend starting with the trial, moving onto the monthly subscription, and then switching to an annual plan if you decide you like the platform.
The Platform: Leaderboard
Upon logging into the platform, you will see a quick update on stocks from the “Leaders” list, “Leaders Near a Buy Point” and a “Leaders” list.
“Leaders Near a Buy Point” are stocks within 5% of the recommended buy price whereas “Leaders” are past picks that are performing well. “Leaders” may eventually make their way onto the “Leaders Near a Buy Point” list in the case of a pullback (or updated research).
Each section shows the company, the current stock price, and the research provided by the IBD team. The dashboard is well-organized and offers a great snapshot for investors who don’t want to spend hours researching and reading reports. IBD’s team does a great job of researching companies and summarizing the information in a simple format.
The dashboard also focuses on quality over quantity. IBD isn’t making recommendations for the sake of it and, if there are only a few good buying opportunities, the dashboard will reflect that.
When scrolling through the Leaderboard, you can choose to add a stock to your watch list, analyze the chart, read recent articles, or set an alert.
The charts are one of the best features of the Leaderboard platform (second to the stock picks themselves). They help traders/investors get a better understanding of the history of the company and its current standing.
The charts are beautifully annotated and provide trading rationale for IBD’s bullish thesis.
IBD defines the ideal buy zones on the chart, making it easy for casual investors to plan entries.
To the side of the chart, you can get a quick snapshot of a company’s fundamental performance, technical performance, and market benchmarks.
The Big Picture
The Big Picture section provides a daily market update. It’s easy to read and packed with valuable information.
While you can choose to view “Intraday Updates,” we found that the real value is in the “Daily Big Picture.” Having all of the information in one place saves you time you may have otherwise spent jumping between CNBC and Wall Street Journal articles.
IBD Sector Leaders
The sector leaders section provides updates on some of the top stocks in each section. It is frequently updated and follows the same format as the stocks listed on the dashboard.
This is a great idea generation tool for investors looking to diversify and/or build positions in specific sectors.
For those looking to dig even deeper, the “IBD 50” pages shows a list of IBD’s top stocks. You can choose to view the top 10 or view the full list of 50.
This tool is helpful for traders and investors looking for even more investing opportunities. The stocks listed may not be in “buy zones” yet but may present opportunities in upcoming trading sessions.
In this sense, the platform is well-organized and caters to the needs of different type of investors. Based on your level of involvement, you can choose to view the Leaderboard (lowest involvement), Sector Leaders, or IBD 50 (highest involvement).
Final Thoughts on Leaderboard
Leaderboard is a valuable tool for investors looking to expand their portfolios by identifying potential outperformers.
IBD does a good job of researching stocks and keeping investors updated.
While traders may get some use out of Leaderboard, the platform is mostly geared toward growth investors due to its simplicity and longer term horizons.
MarketSmith is a bit more versatile and takes Leaderboard to the next level.
MarketSmith is a research platform designed for more sophisticated investors. This platform can be thought of as the “self-serve” version of Leaderboard. Whereas, Leaderboard provides investors with research and stock recommendations, MarketSmith enables investors to do the research on their own. There are a few benefits to this approach:
- You can find more trading opportunities
- You can custom tailor the platform to your own trading style
For example, if you’re primarily focused on trading small cap stocks under $20/share, you can use those criteria to filter your results in MarketSmith. Essentially, MarketSmith is a more flexible platform that allows you to implement your own strategy whilst still benefiting from the research provided by Investors Business Daily.
MarketSmith can be accessed for either $149.95/month or $1,499/year. You can also choose to take a 3-week trial for $19.95.
While the MarketSmith platform is more than double the cost of Leaderboard, the pricing is justified by the offerings. It could be argued that you get way more than double the power of a Leaderboard subscription and we definitely preferred the MarketSmith platform.
The MarketSmith platform is loaded with powerful tools and features. It would be impossible to cover each feature in-depth but we’ll do our best to highlight our favorites.
Education and Webinars
Upon logging in to the MarketSmith platform, you will be greeted with a few options. The first one that stands out is the education section (most noticeably, the webinars).
The webinars section provides details for upcoming webinars as well as an archive of previous webinars. While not the key offering of the service, this provides a lot of value in an industry where education can affect your bottom line.
A quick glance at the archive shows topics spanning portfolio management, trading psychology, and technical analysis.
The MarketSmith charts are clean and packed with valuable information.
This is not your typical charting platform. Whereas platforms like TradingView and eSignal provide great charts, the true value of MarketSmith charts lies in the information and research provided. The charts are covered with a combination of fundamental and technical data to help aid the research process.
MarketSmith uses bar charts with the following overlays:
- RS (Relative Strength)
- Pivot Points
- 50 and 200 Day Moving Averages
- EPS Annotations
- An S&P 500 Line (for Benchmarking)
- Average Volume Line
- Corporate Events
- And more
You can choose to add/remove some of the overlays via the chart menu.
Chart timeframes can be set to intraday (minutes), daily, weekly, and monthly, depending on your trading style.
The charts are also annotated with chart patterns (based on timeframe), such as:
- Cup and Handle
- Double Bottom
- Flat Base
- Ascending Base
- Cup (Rounding Bottom)
The charts do a great job of fusing technical and fundamental data. You can track a company’s EPS growth, S&P benchmark performance, and other key information without leaving the chart screen.
The charts are also helpful for decision support. If there is a trading opportunity for a given stock, the chart will highlight the ideal buy zone (blue), profit taking zone (green), and stop loss zone (red). This provides visual support during the trade planning process.
Here are a few other features:
- Custom chart annotations – Add your own annotations and/or technical drawings (i.e. trend lines)
- Saved layouts – The platform automatically loads your chart settings from last login
- “Play” Feature – The play feature rotates through a list of charts automatically for quick analysis and updates
In the future, it would be nice to see the addition of candlestick charts as well as better zoom functionality.
Fundamental Data & Related Information
Fundamental data is laid out in the top corner of the chart.
The platform offers a few common fundamental data points as well as a few of IBD’s proprietary metrics (i.e. EPS Rating). Here is the full list of fundamental data:
- EPS Rating
- Group RS Rating
- SMR Rating
- Acc/Dis Rating
- Composite Rating
- Timeliness Rating
- Growth Rate
- Market Cap
If you want even more information on a company, you can click on the “Related Information” tab on the right.
This tab will give you information on:
- Insider Ownership
- Institutional Ownership
- Fund Ownership History
- Industry and Sector Benchmarks
- Options Data
The one feature that is particularly unique is the “Checklist” feature. This list tells you if the stock meets the criteria of successful investors like William O’Neil, Warren Buffet, Benjamin Graham, Peter Lynch, and more. Checklist criteria may include EPS ratings, stock price, stock volume, return on equity and more.
As mentioned above, one of the main benefits of MarketSmith over Leaderboard is that it allows you to cast a wider net. The platform incorporates more scanning tools and discovery features. One of those features is called “Stock Ideas”
Stock Ideas provides pre-built scans of stocks based on a variety of criteria. Here are a few examples:
- Breaking Out Today
- Earnings – Gap Up
- Near Pivot
- Top Rated IPO’s
- Up on Volume
Once you choose a stock idea, the scan returns results. You can filter through the results manually or use the “Play” feature to rotate charts automatically.
The “Stock Ideas” feature is particularly useful for day traders and swing traders because it accounts for recent data (such as stocks gapping up or down). This can be helpful for building watch lists and planning trades.
MarketSmith screeners are a gem within the platform. You can choose between pre-built scans and custom scans.
What separates MarketSmith from other scanning platforms like FinViz is a) the research that goes into planning these screeners and b) the incorporation of fundamental data. Most of the scanning platforms we’ve reviewed have been heavily biased towards technical analysis whereas MarketSmith screeners lean more towards fundamental analysis.
The custom screens can help you build screens that match your personal trading style. You can choose between over 130 technical and fundamental indicators, such as:
- SmartSelect Ratings
- Price and Volume
- And more
For example, you could scan for the best Internet-Retail stocks based on EPS and RS ratings. Similarly, you could scan for the best low-priced stocks by settings price filters.
It takes some time to find the settings that match your style but the time invested is well worth it.
If you’re scanning for a lot of stocks and jumping from idea to idea, it can be easy to lost track of some stocks. To combat this, MarketSmith allows you to set price alerts with optional email notifications and alert notes.
There is an alerts section on the top of the chart that shows today’s alerts as well as other recent alerts.
While this is a nice feature, it would have been helpful if they offered different types of alerts (such as moving average crosses). Considering these types of alerts are available in Leaderboard, it would make sense to include them in MarketSmith as well.
Investors Business Daily Support
Chances are, with a complex platform like MarketSmith (and even simpler platforms like Leaderboard), you will run into some questions. Investors Business Daily provided great support whenever it was needed. The team was knowledgeable on the offerings, had personal trading experience, and responded promptly.
Wrapping Things Up: Which Platform is Best For You?
Overall, both platforms are worth the price tag IF you have a plan for them. Both platforms are designed for traders who take a slightly more active approach to their investing (i.e. not just loading up on FANG stocks). If you’re still stuck on which platform to choose, here are some differentiators:
Leaderboard is best for:
- Growth-based strategies (CAN SLIM)
- Investors who value professional research
- Casual investors who prefer not to invest too much time in their own research
- Investors who want brief market updates and quick snapshots
MarketSmith is best for:
- Diligent, research-driven investors
- Investors with a heavy focus on fundamentals
- Investors looking to track a larger pool of stocks
- Investors with unique strategies that require customizable tools
- Day traders and swing traders interested in idea generation (especially if fundamental analysis plays a role)
- Traders who value simple, organized fundamental snapshots
- Traders and investors who check the market daily
Both products offer trials and we highly recommend taking the platforms for test drives to see if they are a good fit for you.