Well, you've covered a tremendous amount of material in this book especially in terms of making in-depth analyses of the balance sheet, income statement, and cash flow statement. This is definitely a good start, but you may be scratching your head and wondering: OK, so how do I apply all this information?

It's a great question. After all, there are thousands and thousands of public companies to apply your analytical tools to. But no private investor has enough hours in the day to dive into the detail of all public companies. In fact, not even top-notch Wall Street analysts or investors can cover them all.

How do the pros deal with this pile of data? There are a variety of approaches. First, an analyst may be responsible for a certain industry sector, which narrows the field considerably. Even that may not be enough; an industry can involve hundreds of companies, and as a result, an analyst may focus on an industry subset.

This is not helpful for you, though. From an investor's standpoint, you do not want to have all your stock investments in one industry. That simply puts too much risk into your portfolio.

The next approach is stock screening. Essentially, this means using an online system to query a database of stocks. To do this, you will select several tests. For example, you may want to search the database for companies that have seen earnings per share grow 25 percent per year for the past year...