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Goese Stock Trading Reference

NEWS/RESEARCH/DATA:

HUNT & EVALUATE:

PORTFOLIOS:

GUIDING PRINCIPLES:

  1. Study – Do your homework, including all the debt and earnings metrics plus discussion boards and news. Your hunches do not control the market. Work WITH the flow & do your homework.
  2. Quality – Go with the solid stock that has just had some "bad days." There are lots of these, so avoid buying junk.
  3. Stay down till after the blast – Remember the market reaction to company statements & earnings releases may not make sense.
  4. Don't be greedy – (a) When selling, getting a 5% return in 24 hours is better than having a trade turn into an iffy, long-term "investment." (b) When buying, if you feel really good about the stock, don't try to squeeze pennies out of a purchase price only to lose the swing opportunity.
  5. Capitalize on overreactions – Take advantage of this "herd behavior" but don't count on the herd turning around the next day.
  6. Let it go – Thinking about the mock trade that woulda/coulda made 50% in a day does nothing for you.
  7. Stay alert & active – ...even if the ultimate "action" is to stay on the sidelines for a day.
  8. Review daily – Examine holdings & watch list frequently. Things change fast & often.

 

 

 

MARKETS:

New York (9:30AM-4PM*):
London (FTSE 8AM-4:30PM):
Japan (TSE/Nikkei 9-11AM & 12:30-3PM):

 

CHECKLIST:
(SWING TRADES & INVESTMENTS)

  1. Trade liquidity.
  2. Market cap (>$250M)
  3. Revenue trends
  4. CHARTS! (Price trend & swings... year/month/week; beta)
  5. Earnings announcement timing
  6. Valuations & ratios (P/E, debt to equity, ROE)
  7. Quick ratio
  8. Optional on marginal cases: Dividends
  9. Sensible segment timing
  10. Insider holdings & transactions
  11. News review

KEY TERMS/ACRONYMS:

Beta = A measure of an investment's relative volatility or systematic risk, calculated using regression analysis.*

BP = Buying Power. Depending upon context, either the $$ you can use to trade (total cash + maximum margin) or $$ tied up to cover an option or trade.

Current Ratio = current assets ÷ current liabilities (compare to others in industry)

Capital = equity + long-term debt

Equity = value of shareholders' stock + retained earnings (not paid as dividends)

PEG Ratio = PE ÷ Annual EPS Growth Rate. Ideally, this is <1. A lower PEG means that the stock is more undervalued. Caution: The numbers are projected & there are variations (e.g. one year vs five year growth).

Quick Ratio = current assets excluding inventory ÷ current liabilities (because inventory may not be a very liquid asset)

Shareholders' Equity = total assets - total liabilities *OR* share capital + retained earnings - treasury shares (the portion of shares in the company treasury)

 

Marketing Counsel, Inc.

*Nasdaq has pre-market trading 7-9:30AM & after-market hours till 8PM.

 

 

LONGER HOLD/INVESTMENTS:

REFERENCE:

DISCUSSION:

 

*Beta alternate definitions & comments: The higher the beta, the more sharply the value of the investment can be expected to fluctuate in relation to a market index. For example, Standard & Poor's 500 Index (S&P 500) has a beta coefficient (or base) of 1. That means if the S&P 500 moves 2% in either direction, a stock with a beta of 1 would also move 2%. Under the same market conditions, however, a stock with a beta of 1.5 would move 3% (2% increase x 1.5 beta = 0.03, or 3%). But a stock with a beta lower than 1 would be expected to be more stable in price and move less. Betas as low as 0.5 and as high as 4 are fairly common, depending on the sector and size of the company. (2) The measure of an asset's risk or "co-movement" in relation to the market (typically the S&P500) or to an alternative benchmark or factors. In this context, it is possible for a security to have a zero beta and higher volatility than the market. In this context, the beta can change depending upon the movement of the market.

Other Key Terms NOT Relevant to Goese Trading Model: