Tackle Today: Stability is Key
March 22, 2022
«Foundations Made of Stone.»
Good Day Traders, Coach Greg here.
Ever wonder if the stocks you’re investing in will be around for a long time? When I think about the stocks I own I always sit back and think about how stable the companies are that I own? I know that some stocks like KO or AAPL will most likely be around for a long time but then my thoughts immediately go to stocks that a lot of folks thought would be around for a long time as well. Stocks like Blockbuster or Enron? I know these two particular companies failed because of obsolescence and outright fraud but there were many other companies that just faded away in time. The most famous companies that come to mind are Eastman Kodak and Nortel. These two companies were the darlings of the investing world for ages. You may or may not have heard about them depending on your age and your involvement in the markets. Nortel might be the less famous of the two as it was a Canadian company but it had ties to AT&T and therefore it still had some star power in the investing community. The question I find myself asking is what was the difference between a KO and a Kodak?
The only real differences I could find were in the Fundamentals of the companies and more accurately the changing Fundamentals of the companies. The fundamentals that I am referring to are mainly found on the balance sheet and the cash flow statements. In addition to this the income statement can also provide insight into the health of a company.
On these statements one can find things like revenues, net income and market capitalization. These metrics can tell you a lot about how a company is performing in the current market place. Looking at the trend of these metrics is the most important thing because it can be a forewarning of potential problems with the business model. For example, our friend Nortel had a market capitalization of almost 400 billion dollars at its peak and only a short two years later that market capitalization was only 5 billion. This is drastic turnaround for such a stellar company but it shows that no companies are immune to problems in business.
This is why it is important to have a process of reviewing the fundamentals of the companies you own and the companies you wish to own going forward.
If you want to better understand the process above then I suggest you to join the newest trading lab here at Tackle Trading and that is the Fundamental Society where we talk all things fundamental including what good and great companies look like and how they keep things healthy in all economic conditions.
#TeamTackle
🛑 Upcoming Options 101 Webinar: Iron Condor for Beginners with Coach Tyler Craig | March 28th, 2022 at 8:30 PM EST on YouTube
Join Coach Tyler Craig as he teaches everything you need to know to get started with trading Iron Condors for monthly cash flow. As the architect of Tackle Trading’s Cash Flow Condors system, Tyler brings a wealth of knowledge on the topic and will break down this popular strategy in simple, easy-to-understand terms.
In this webinar you will learn:
✅ What is an Iron Condor
✅ How to Build an Iron Condor
✅ Why Iron Condors Make Money
✅ Best Practices for Trade Management
✅ The Ideal Stock to Use
Video of the Day: Trading Glossary: What is an Iron Condor
The Iron Condor is a limited-risk, limited-reward, neutral, cash flow options strategy designed to have a high probability of profit when the underlying security is range-bound within a certain price level. This strategy results in a net credit and is considered a Theta strategy as it benefits from time decay.
Chart of the Day: $SPY
The $SPY represents the S&P500 index. It is a multiple of the major index price. This ETF pays a small dividend and can be a good way to invest in the overall index at a reduced priced point. The weighting of the stocks in the index is done by market capitalization and therefore the biggest stocks in the index have the most influence and so with this mind the index is not always representative of what’s happening in the markets overall and this should be considered at all times.
Today’s line up
Tales of a Technician: Chart Patterns & Team Phoenix
One of the best ways to pick up on someone’s trading style is to analyze their trade journal. This week’s video shows me walking through the rationale behind a sampling of practice trades we played in my Team Phoenix Trading Lab.
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show 8:30 PM EST
This is our weekly MasterMind group. Join the coaches tonight, 8:30 PM EST to discuss the markets and help you prepare for the week.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
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