Trading Tips Blog

1 2 Peter Lynch is one of the most successful investment managers of all time. But, he retired many years ago and many new investors are unfamiliar with him. That is unfortunate since there is much to learn from studying Lynch’s record. Lynch’s record is among the most remarkable in market history. He managed the Fidelity Magellan Fund, and grew it into the largest mutual fund in the world by the time he retired. From 1977 until his retirement in 1990, Lynch delivered ...
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In a recent blog post, we highlighted the potential benefits of using short term trading strategies. One advantage of trading frequently can be the fact that it allows a trader to rapidly compound gains. Through that process, wealth can accumulate quicker. Our post drew a variety of responses. Some readers asked for specific examples of short term trading strategies. There are many resources available on this topic. But, most of the best strategies will require a great deal of effort or ...
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1 2 The S&P 500 has gained almost 9% since the end of last year, defying the prediction of many experts for a bear market. This is a strong market and the bulls have been well rewarded. As difficult as it is to beat a bull market, we have been doing that this year with a simple strategy. And we have been publishing our trade recommendations in advance each month. At the beginning of the year, we began sharing real time buy recommendations ...
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1 2 Most of us like to believe life is fair. But, in reality, very few market transactions are fair. Economists believe almost all transactions involve asymmetric information. In most transactions, one party knows more than the other party. For example, when consumers are buying a used car it seems fair to assume the seller knows more about the car than the potential buyer. This problem is so well known many states and the federal government have taken steps to level the ...
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1 2 It is often said that cash is king. This phrase has many meanings to different people. For investors, it can mean maintain a large cash balance so they have buying power ready when they find bargains in the stock market trading. Or, investors may apply the phrase as a screening tool to identify companies with large cash balances that allow the companies to take advantage of opportunities as they become available. In this article, we look at why companies ...
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1 2 In recent months, traders have seen news stories move stock markets. They have always known this. We often see stock prices make sharp moves after earnings announcements. But, in the past year we have seen widely anticipated events move markets in unexpected ways. Let’s consider the US Presidential election as an example. Heading into election day, it was widely believed that Hillary Clinton would win while a surprise victory by Donald Trump would set off a bear market. As the election ...
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1 2 We’ve all seen it happen dozens of time. A stock sells off sharply after missing analysts’ expectations. Sometimes, earnings per share (EPS) come in just a penny below expectations. But that small miss can cost investors hundreds of millions of dollars. Of course, we’ve also seen the opposite happen. A stock soars after the company delivers EPS that beat expectations. It seems that beating expectations is all it takes for some stocks to end up on the list of the market’s ...
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1 2 In a recent blog post, we described how to create a screen to spot stocks using indicators that appear to be important to Warren Buffett. Our screen focused on a few fundamental indicators and targeted companies with high return on equity, strong cash flow and management teams that maximize the return on assets investors have entrusted to them. We used the free screening tool at the FinViz web site and applied the setting shown below. As we noted, our screen ...
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