Trading insights in five minutes. Everyday.
We love communicating with our students and Tackle Daily is our daily email we send out Monday through Saturday. This five-minute read is designed to kick off your day the right way. You’ll find out what is happening at Tackle Trading on that day along with our market thoughts, a chart of the day and other inspirational items. If you missed any of our previous emails, you can find them here.
April 16, 2021
Traders,
Stocks are the ultimate wealth generator. If someone with a long time horizon asks me when the best time is to buy them, my answer is always “now.” History bears out the wisdom of this response. The longer your sit in cash, the greater your underperformance.
April 15, 2021
Today’s message complements yesterday’s Tackle Today, highlighting the S&P 500’s high P/E ratio. Here’s how I think about valuation. It matters little, if at all, in the short-run (say, 1 year). But it does matter some in the intermediate-term (5 years).
April 14, 2021
Stock prices are high these days. The S&P 500 trades with a forward P/E ratio of 21.88, which is the highest reading since the dot-com peak in 2000. Some pessimists point to the rich valuation as a reason to avoid buying stocks here.
April 13, 2021
It’s becoming increasingly easy to find evidence of rampant speculation these days on Wall Street. Particularly in what Coach Mark calls the “underbelly” of the markets. I stumbled across the Chart of the Day in a recent New York Times article – Penny Stocks Are Booming, Which Is Good News for Swindlers. Here’s the money quote:
April 12, 2021
Markets are hesitating to start the week after an extremely strong start to the month of April. This type of hesitation is normal after a strong run and we certainly have a number of catalysts this week to help potentially kick start the action again. Seasonality and sentiment remain very strong as we head into the official kick start of earnings season.
April 9, 2021
There isn’t always a direct link between the economy and the stock market, but historically stocks have a tailwind when the economy is rockin’. This sentence is neither earth-shattering nor illogical. And yet, some will say that the stock market has already priced in the post-pandemic boom.
April 8, 2021
When I was a new trader, I rarely looked to the horizon. Instead, my gaze was set a few steps in front of me. My trade duration was minutes to days, not weeks to months. In my youth, I cared little for the tide. It was all about surfing each wave.
April 7, 2021
Benjamin Graham said, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” The longer you invest, the more you’ll discover the truth of this statement. Sentiment, or the masses’ feelings due to news, trends, politics, or the economy, is the ultimate driver of prices in the here and now. But in the long run, it turns out that all of that goes away. What’s left, and ultimately what is weighed, is earnings.
April 6, 2021
The threat of rising rates has been hanging over stocks for months now. Some say it’s much ado about nothing, and others contend it’s a peril that demands attention. How it impacts you depends in large part on what assets you own.
April 5, 2021
The Dow and S&P 500 start the week at all-time highs as April has started off with a bang. April tends to be one of the best performing months in the stock market and it hasn’t disappointed us so far. Aside from seasonality, sentiment has shifted favorably over the last week.
April 1, 2021
I’m writing this on a day where the Russell 2000 Index dropped 4%. The bloodbath reminds me of a stellar Peter Lynch quote. He was a rock star fund manager that ran the Fidelity Magellan Fund from 1977 to 1990. Over that time, he averaged a 29.2% annual return which more than doubled that of the S&P 500. He also wrote a classic book called One Up on Wall Street.
March 31, 2021
Did you know that not all market indexes are created equal? There are three standard methodologies for creating an index: market-cap-weighted, price-weighted, and equal-weighted.
March 30, 2021
The S&P 500 Index was created in 1926, nearly a century ago. Its first iteration included 90 stocks but was later expanded to 500 in 1957. However, it wasn’t until 1976 that individual investors could purchase a mutual fund that tracked it (thanks to Vanguard).
March 29, 2021
Futures are down slightly at the start of the week as market headlines concerning the collapse of Archegos Capital are weighing on market sentiment. Goldman Sachs, JP Morgan and other banks forced the hedge fund Archegos Capital to liquidate positions through large block trades on Friday after the hedge fund, which was using extreme leverage, was issued margin calls.
March 26, 2021
There are two paths to investing for the long run in the stock market. The first is diversified; the second is concentrated. You can buy the entire market through an ETF or mutual fund, or you can buy individual stocks.
March 25, 2021
Does it make you nervous when you see headlines about how stocks are at all-time highs? Do you conflate “high” with “risky” and “low” with “safe?” If so, knock it off. It isn’t true. At least not in the short run.
March 24, 2021
Yesterday we learned that institutions are elephants. High volume sessions reveal them moving about. But how do you know if they’re buying or selling?
March 23, 2021
The Wall Street jungle hosts a variety of animals. Retail traders like you and me are the flies. We’re small, quick, and make little impact on the shape of the forest. Institutions are the elephants. They’re massive, slow, and can move darn near anything they want. Many a distracted fly has been smashed by their heavy footsteps.
March 22, 2021
Tech is leading the way to start the week as yields pull back to start the week. The market has been on a choppy roller coaster over the last few weeks as yields and rates continue to capture the headlines. This could continue for the weeks ahead as the market continues to analyze inflation and interest rates against the backdrop of what is expected to be a very strong economy moving forward.
March 19, 2021
A subset of technical analysts focus on seasonality or the historical patterns that play out at certain times of the year. One of the more popular measures known as the January barometer states, “As goes January, so goes the year.”
