Growth & Value Strategies | James Boyd | 12-12-19

Growth & Value Strategies | James Boyd | 12-12-19


hello and welcome to growth and value
strategies my name is chase Boyd we welcome you here December 12th
we welcome you as we talk about the strategies whether the difference of
growth or value this topic is really huge especially right now as we’re
seeing the indexes really breakout to new highs is Santa Claus perhaps coming
a little earlier this year and bringing some potential gifts we’ll talk about
that so just real quick as we’re getting started remember you can also follow me
on twitter at jade underscore TBA you could also go to
Twitter type in Jays Boyd and you’ll see you could search for me that way as well
and we welcome you here today as we get started remember that as we go through
if you have any questions pertaining to fundamental analysis technical analysis
macro things like that go ahead and type those questions in and that’s fair game
here so remember that why this webcast discusses tactical analysis are there
approaches including fundamental analysis may assert some different views
and we’ll talk about that remember that when we also talk about examples
remember that in order to demonstrate the function of the platform we will
talk about that we’re going to be using examples past and current but remember
that TD Ameritrade it’s not making any recommendations determine suitability
for any security or strategy the investor picks gets to pick what type of
stock what type of strategy they want to pick and also remember that all
investing involves risk including risk of loss so as we’re getting started here
today what are we going to really cover well first off let’s kind of talk real
quick about I called it the stock market Derby that’s kind of what it feels like
lately you kind of see this mad scramble to the upside as investors are chasing
returns and potentially down the stretch they come in to the year end we’re going
to bring up the Nasdaq but we’re also going to bring up with that the tnx okay
the tnx is going to be very important because we’re gonna be looking at some
financial companies and what that might mean in terms of growth or value now
bullet point two with what we’re seeing in the market are we likely to see
growth or is it really more value we’ll talk about that and then what we’re
going to dive into a little bit today is using analysts reports okay we’ll talk
about that and how that relates to TD Ameritrade and not using interest rate
reports to identify fundamental and technical setups now I’d like to think
about fundamental analysis is really identifying what is it that we’re buying
the technical analysis when we’re going to talk about both those now the
learning outcome is to be able to identify strong neighborhoods and this
goes back to just because someone was invested in the market this year does
not mean they got market returns so we want to always be talking about where’s
the relative strength is it growth or value which we will we’re gonna be
talking about identifying maybe stocks it might be having outperforming
fundamentals and technicals that is what we’re gonna be shooting for here today
and we welcome everyone so let’s go ahead and just take a quick look I’m
gonna go back just real quick we’re gonna spend two to three minutes and
we’re gonna what we’re gonna be taking a look at just real quick the the ndx to
close and if we take a look at just real quick the ndx what I’m going to be doing
is just take a look at where we closed now the market was a little softer to
start maybe start a little soft soft we’d come out talking about potential
China deal the market shot to the upside rallied mid day kind of faded back a
little bit and what you’re going to notice is it ended up today
rallying into the close not at the high of the day but we’re gonna see that we
see a pretty strong move and closing at the highest level of the year now
the one thing is what we said before is if the Nasdaq and the raw sir are the
strongest indexes again some investors call it risk on meaning they’re trying
to buy assets that might outperform the indexes okay now what does that mean for
growth well it might be more pro-growth the two the two indexes we look at on
we basis we call VI GA X and I’ll put that right there there it is and I’m
going to look at the monthly return so when we look at this growth index the
growth index has really done about two point five eight and that’s the growth
index and if we take now think about the growth index like Microsoft Apple etc if
you look at VI EAX that’s the value index and if we looked at monthly
returns what you’re gonna notice right there is we are seeing a little under
performance relative to the growth so if we looked at let’s say certain areas and
we said where are investors going as of right now we see there’s more of a tilt
towards really growth okay now the one thing I want to point out is
we start to look at a couple examples when we look at that whoops when we look
at the tnx we’re talking about the 10-year yield now remember here over to
the right this is showing eighteen point nine seven we want to move the decimal
over one and it’s really gonna be showing 81 point eight nine we had a
strong move in interest rates and if you’re a utility company and you borrow
money if you’re a real estate company you borrow money if you’re maybe a
healthcare company you borrow quite a bit of money etc and it may be a staple
company and you bar large amounts of money etc rising rates might not
necessarily be good because you’re having to borrow those funds at a higher
level so your cost of capital for your firm is rising okay and that can be a
negative if that is ongoing so value areas such as utilities staples and
healthcare might be underperforming a little bit now in our class we do have
for the fundamental class we do have some stocks that I would be a little bit
more concerned about such as Esso which is a utility company and member
utilities with interest rates rising could be under pressure that one would
be a concern and the other one that we might say might be
a little bit of concern we might even say XEL those are you two utility
companies and when you look at the utility space
ix you pull it up you’re gonna kind of see that look it hasn’t really crashed
down but what you’re gonna see is it’s really lacking a recent term trend those
would be two stocks in the portfolio you might want to evaluate for potential
exits or just maybe a do a trend analysis okay now let’s go to real quick
so we talked about now are there any questions in terms of the index okay let
me know number two are there any questions of how we’re trying to
evaluate or how we come to them to the X to that end point that right now we’re
seeing more Pro growth we’re just looking at Vai jacks vivax to see the
differences the second way we can evaluate that to see is a more growth or
value obviously looking at the indexes like the Russell monastic the last way
you can look at it as well as what type of sectors are leading to the upside
those are three ways to kind of really get a gist if is there more growth or is
there more value now let’s go into real quick point number three okay and we’re
gonna really be talking here about using analyst reports to identify fundamentals
now what I’m gonna do here before we actually go full full-fledged into that
and look at a number of examples how do we really find some of these examples of
these outperforming or these strong neighborhoods we talked about in the
learning outcome now I don’t know if you’ve ever had a year where you said
geez I could just do a lot better well I think what it really comes down to is a
routine I mean really if someone comes up to me and says I thought I could have
done better this year I’ll always ask well tell me about what
you do on a weekly basis tell me what you do on a daily basis and sometimes
there’s there’s an inconsistent habits that are leading to may be spotty
potential returns so let’s kind of talk about something that ambassador could
from a routine standpoint five minutes or less let’s look for these strong
neighborhoods and then dive into these fundamentals on the technicals one of
the places the and the Ambassador might like to go is right on the TD Ameritrade
website and if we log into the TD Ameritrade website what you’re going to
notice is we’re going to go right to where it says research and ideas nice
and simple now what you’re going to notice is if we go to research and ideas
we’re now going to go right to where it says sectors and industries if we go to
sectors and industries on the right-hand side we have a phenomenal tool that I
think sometimes maybe we don’t quite look at but it’s a great visual tool and
if you’re a visual person this is right kind of maybe where we’re gonna head
here we’re gonna click on the right hand side
click on that right there and now what you’re going to see is it’s going to
pull up so we clicked on that TD Market Monitor over to the right there it is
and now what you’re going to see is it’s going to pull up and I’m gonna make it
as large as possible right in the middle of the screen now what this is doing is
it’s looking at the performance for today okay for today well the biggest
thing is if I said hey I’m gonna change the timeframe which I want to do we’re
gonna go back and say look I want to see the performance over the last 1 month I
mean one day is a little tough ok but if we go back and say change the timeframe
what’s the goal again why are we doing this we’re trying to find these stronger
areas drill into the fundamentals find some of the out performance there we’re
now going to go to where it says last 30 days right there and we’re gonna click
on that and now once we click on that right there now we can see some of these
areas that in the last 30 days what’s been happening and then what sectors are
leading here top to bottom now if we take a look at this what I’m going to do
this is just looking at the sector’s but if we drill down into this area if we
just click on let’s say healthcare itself and when I say click on
healthcare I’m just gonna click right in that box and a click on it now what it’s
going to do is it’s going to drill down into the industries and just take a look
at some of these stocks just real quick so the life sciences areas you’re gonna
see that this area highs depreciation to the lowest appreciation stocks for
example like just take a look at a couple of these ok it doesn’t have to be
complicated a stock like Agilent ticker a ok that’s been on us well just we’ll
take a look at it okay ticker a here’s what’s been happening
okay so what you’re gonna notice is a pretty strong uptrend we’re looking at
look at some of these in just a moment you’re gonna see that another one in
there you’re gonna see waters right the boxes is really think of this as the
market cap size alumina and you’re gonna see even like thermo Fisher but the area
that I want to focus on here today is the sector of financials based upon what
we’re really seeing in the space of the interest rates now what I’m going to do
first is I’m going to bring up let’s say the first neighborhood it brings up so
the second strongest neighborhood is financials the first strongest industry
group as of right now is the capital markets this gives us immediate
watchlist in which we could go evaluate so a stock
like st team a stock like Moody’s MCO and now what you’re going to see is the
SP global SPG I and if we work down to let’s say banks you’re gonna see there’s
a small company we’ve never heard of before joking called JP Morgan and if
you look a little bit over to the right key core regional banks citizens right
we can see some of these stocks that are actually moving to the upside so finding
sector excuse me top-down analysis market sector industry stocks we just
talk for less than probably seven minutes we talk market sector industry
and we have immediate watchlist so doing that does not take long okay
now I always joke as my kids and I say look I’m gonna give you a Simon you can
give me all the excuses you want it’s going to take longer if you give me the
excuses then if you just go out and do it and you prac
what I tell my kids to do like dad I know you I’m just going to go do it
because I know that giving you excuses and it does take longer now think of
this is how could you use this as far as a routine five minutes or less to make
sure are you in the areas that really have the trends now what I’m going to do
is I’m going to pull up one of the areas that I saw down here was insurance and
there’s a company right there is it’s called Chubb CB and what I’m going to do
is I’m going to bring up Chubb and let me kind of show you what the stock looks
like and let’s kind of start to dive into this bullet point number three
using alias reports to identify fundamentals and technical setups so
when we look at let’s say Chubb ticker CB we’re talking about insurance we see
that the stock has a longer term and let me kind of draw a diagonal line you’re
gonna see that we have a longer term diagonal line okay there it is now why
now what’s may be of interest on this stock well if we take a look at the
stock what you’ll notice is the stock was way elevated off that line from a
longer-term support level it’s come down to that support level and as we zoom in
here what you’ll really notice is maybe a horizontal resistance perhaps about
right there now when we think of a value investor a value investor if we think
entries were typically thinking about something that’s fallen down to a
support or longer term moving average based itself and it could be maybe
starting to break above the area of resistance now what sectors it
financials what neighborhood is an insurance now let’s start taking a look
at for example some of the things we’re seeing so right on the TD Ameritrade
website let’s kind of get a little quick look as far as what are some of the
fundamentals on Chubb and dive into the technicals now if we look at let’s say
chump ticker CB fault fall along on this we’re on the summary page here okay now
we do see that they do pay a dividend den is about 2% beta here is about 0.7
we see the fundamentals tab right here we’re going to click on that and when we
scroll we click on the fundamentals tab and then just scroll down a little bit
these fundamentals price-to-earnings sales and book those numbers are right
in line with what the sample investing plan talks about in the online course
very important you have actually seen that log into it the far right hand side
you’re gonna see a sample investing plan now what you’re going to notice is we
can also here go over to the right and click on peer comparison this will give
us a table format of Chubb compared to others but what I want to do right here
is I want to get into the analyst reports where do we find the answer
reports why does the investor care well right on the thinkorswim platform by TD
Ameritrade we’re going to go to where it says analyze now if we click on analyze
we’re gonna then going to go down to where it says fundamentals let’s do that
so we’re on the thinkorswim platform by TD Ameritrade analyze fundamentals now
if we click on analyze and then we’re on fundamentals okay
so again we want to know what we’re really buying how does it stack up now
there’s a couple of companies such as now we typed in CB there it is and it
says research team CFRA the street market edge there’s different firms and
none of these are TD Ameritrade these are separate companies that are really
giving their opinion their best estimates on what they think these
companies can do in the future and where they stand now the 2/4 analyst reports
that I’m gonna actually highlight just as a starting point would be CFRA and
also the second one will be the street and we could just start with there and
I’m gonna use now you what you’ll notice is we might not always get where all of
them are available some companies don’t cover all stocks what I’m going to do
they’re gonna go to where it says the street and I’m just gonna click on where
it says download now when I click on let’s say download this is where it’s
going to give us an interesting picture as far as how this stock really compares
to others within the space there we go so let’s pull it up now what they
actually do and you’ve probably seen this before is the street will rank it
let’s say from A to F just like in school now what you’ll notice is they’re
really grading this a B and some of the information that they’re really looking
at as we scroll down we get on the left-hand side stock price performance
some growth ok return on equity now if we actually take a look at this and
again this kind of goes back to price multiples the investor is really
thinking well if I buy the stock am i buying something that’s more inflated
relative to the benchmark or the sector or the industry and what you’re now
seeing is the p/e comparison is CB you’re paying $19 for every $1 of annual
earnings that’s sub-sector average sub-sector being the industry is 20 the
S&P is 23 we’re paying less okay for those earnings relative to the industry
group and for the sector now when we scroll down a little bit something I
want to kind of get to is one of the things we want to look at is this on the
left hand side this is very valuable where we can really see what might be
some other companies in the space that we might include and maybe also looking
at some other ones as well well what it’s going to do is it’s going to show
us water that what’s the stocks that have the highest or the lowest revenue
growth and again if you’re the investor you might not say well I like lower
revenue growth okay you’re probably wanting something that is at least
stable and/or growing the company called PGR is one name that has the strongest
revenue if we said look we want Eva da margin something where it’s a pre-tax
number pre interest depreciation non-cash charges well those
stocks that have those highest numbers right there there they are right there
now how long did it take you to create this report well it’s kind of an odd
question because we didn’t create it so the thing is someone took quite a bit of
time to actually kind of do some of the legwork we’re just kind of taking a look
and seeing where does our company compare that where maybe evaluating and
might there be some other examples that we can look at now what it does is it
expands upon the peer group it gives us other companies a larger like sample of
who are some of the other companies that are in the space and it gives us some
tables last thing I want to show you just real quick on this is when we look
at let’s look when we see revenue growth you’re gonna see over here on the left
hand side there’s our revenue growth again and there’s what’s called the
earnings yield now the earnings yield all that is really doing is it’s just
taking the earnings per share divided by the stock price and you’re gonna see
that we’ve seen that same company PGR again and so what you’re gonna see is on
those two charts we just showed PGR came up the stock that we’re looking at right
now as far as revenue growth not as high and the earnings yield is not as high
okay my point of bringing this up is you do
not always have to be fighting a stock that has the highest numbers mainly
looking for something that is consistent has some fundamental backing and also is
something that is not maybe potentially above the criteria that you’re looking
for so if you’re looking more for value shell might kind of be more of an
example of that value criteria but we’re gonna kind of come to PGR just a moment
now if we take a look at let’s say this stock okay if we take na now by the way
how many of you like knowing that built right within the platform you have
access to third-party resources where someone
done that legwork and you can evaluate different analysts and what their
projections are how many of you like knowing that that’s built into the
platform okay and I think it’s a nice resource I think it could be overlooked
now when we take a look at this what we’re gonna do is write on the sample
plan on the TD Ameritrade website it talks about value entries and I’m gonna
bring that plane up just to make sure that we’re being disciplined right to
the plan so what we can do is we can go right to where it says education on the
left hand side it’s gonna say stocks once we actually go education stocks we
get that where it says the stocks fundamental analysis course alright so
here it goes so if I do that I’m gonna go ahead and say continue if I click on
continue what I’m gonna show you in just a moment is going to be the sample
investing plans right here to the right okay that plan I’m gonna pull it up and
you’re gonna see that the stock chub looks very similar to what the watchlist
criterias now I’m gonna ask you a question it just bejust just be honest
it’s possible to have a plan and never even use a plan I know that because I
knew a guy so the biggest thing is we’re looking for stocks that might match this
plan the second thing we’re also looking for is stocks that actually might might
match those sample entry rules and this says right here the breakout of a basing
pattern okay let’s go back to this chart just real quick okay so I when I teach I
like to always ask myself when I get done teaching can someone be able to
apply and practice what was taught so the examples I’m giving market sector
industry finding stocks within the space I think you could do that number two
when we actually take a look at let’s say how this stock relates in terms of
fundamentals matches those with value criteria and now we’re actually seeing
the stock getting above an area of resistance we’re choosing Chubb from
a standpoint of that it’s in the financial space we’re trying to get
exposure to financials now what I’m going to do in this case is we’re going
to right-click right on the chart so if we right click on the chart right click
in the portfolio we’ve been using the example of having a position size of
$20,000 $20,000 and what we’ve been doing in this class is we’ve been going
right to the pool balls right there and you click on the pool balls you click on
it it goes up percent you click on it again it goes a dollar amount and I’m
just going to type in $20,000 that has been the position size we’ve been using
we’re going to stick to that so we’re going to say look the budget here is
$20,000 and I’ll move that over so we can see it fully now when we have that
we’re just going to go ahead and click on that right there and it’s gonna snap
it and really say well how many shares can you buy if you had $20,000 worth of
capital well in this case it’s about 130 shares so now what you’re gonna see is
we’re gonna go down to where it says let’s say that stop we’re gonna evaluate
where that support level is that support level is probably right about 150 or so
well if we take a look at let us say 150 being support 150 being support less 2
to 3 percent well that would be a hundred and forty seven dollars okay so
if we take a look at this if we set a hundred and forty seven dollars okay day
two GTC that’s saying if the stock goes at that price or less sell the stock at
the market price there it is okay now what we’re going to do is we’re going to
put this in the portfolio so when we take a look at this when I put this in
this portfolio we have a section we label it fundamental class so when you
come to the class we teach we’re not just doing examples we’re managing the
portfolio of stocks that have been accumulated over time now what you’re
now going to see is if we go to say send that order remember there’s no
transaction fee because it’s a US base listed stock we just have the capital
that’s involved when we talked about the stop so I’m going to go ahead and say
send that order now can anyone remind me again what was the name of the stock on
that analyst report the third-party report that we actually saw right on
that TD Ameritrade platform can anybody remember actually so I’m gonna go to
fundamentals I remember what it was do you remember what it was and let me
actually just try to bring it there this so what was the name of the company we
actually saw twice that actually had a higher revenue growth higher earnings
yield we saw it twice starts with the P ends with an R and the middle letter was
G so let’s take a quick look at this and again this kind of becomes maybe a way
in which we could double check maybe are we missing anything within the space P G
R is that correct ah it’s progressive now if you take a
little progress if it has really high numbers but the stock has kind of been
pushed down a little bit now hold on for a second could this be creating a
potential value opportunity what we see on the chart when we go back and look at
that three-year weekly it has come down to the longer-term diagonal support so
let’s kind of take a look at this so if I kind of draw this diagonal support on
the question as always do you draw from the right or the left or the left to the
right the answer is young both if we go right to the left and we kind of just
Nick the bottom of these lines you’re going to see that my gosh we’re right
there okay now if we take a look at this and we zoom in what you’re going to
notice is both of those moving average lines they’re turned up okay so the 10
period moving average the 30 period moving average both are showing for the
first time in months none of this all right here nothing and
we are looking at the weekly chart so from July to November there has been
nothing but all of a sudden now we’re starting to see both of
lines turn up and maybe a level of resistance that could be breaking on the
stock now let’s do a quick evaluation just real quick okay now I want you to
imagine that you buy and you sell homes you go out the houses that are publicly
listed maybe from a court auction or something or you go down to a car
auction okay you go to an art auction right you probably want to have a way to
evaluate what is it worth let’s say you buy and sell stuff on eBay or some
listing website you probably want to have an idea if I buy something what
could I sell it for I think and maybe could I make try to make some profit but
you probably want to know maybe at what point you don’t want to keep bidding
because if you keep bidding there might not be any profit especially in the
shorter term so let’s kind of use the tool that is right on and as so I want
to kind of give you just real quick the purpose of doing this and let me just
real quick I want to kind of show you this okay so let’s kind of say and I’m
going to kind of play it just a quick game real quick so we’re at the where
near the end of the year and I want I want you to cut imagine that the
investor so far this is why we’re learning how to do this okay so if we
had an account there was two hundred fifty thousand dollars okay and let’s
say that your goal was okay that you want to do let’s say 10% for year like
that was your average goal okay and let’s say for example that you’re not
going to put in you’re going to input zero money into the account okay and
we’re just saying for one year okay and we’re going to ask ourselves now the
balance at end of the year question mark well let’s take a look at this let me
kind of show you why being consistent is so important okay
so first off I’m just going to pull out a calculator so if we look at this
what’s the account bounce in this hypothetical example
well it’s 250 dollars okay so if we had $250,000 we’re
investing going for two or $50,000 we’re gonna say our goal for this account is
the goal is 10% a year on average that’s what we’re looking for okay
number two got to that end right – or $50,000 yes
number two 10% yes we’re just saying for one year we’re not putting anything in
and we’re saying at the end of the year what should that account balance beam
well the account balance should really be two hundred and seventy five thousand
dollars just 10% now double check this wonder if this year wonder if you kind
of maybe were in and out a little bit you hadn’t really done as well you
hadn’t really kind of done the routine steps and let’s say for this year you
were just you all you so far you had about five percent well if you had five
percent that would be the account balance up about twelve thousand five
hundred but your twelve thousand five hundred short of your goal and what you
need to think about is not only short this year but what’s happened is you’ve
lost the compounding effects over time and if you add that up you probably
don’t want to look at the calculator that’s why you want to focus on being
just consistent not doing just being consistent on a daily basis being
consistent on a weekly basis and being consistent to a process of how to
evaluate now let’s look at a stock like PG R and let’s gonna see if we can’t see
is this maybe something we might evaluate for a growth or a value so I’m
gonna go the TD Ameritrade website here it is
and why don’t first I want to know immediately is we’re going to use the
intrinsic value calculator remember we talked about going to the auction we
won’t identify maybe what’s the value of maybe what’s the item rolling across the
stage there well if we do this I want to just double-check the fundamentals and
what I really want to find out is what’s okay so it is good
so the urge bashir is positive that’s what I was a little concerned about so
let’s run these numbers now so what I’m gonna do is I’m gonna bring
up and I’m just gonna label this as stock one and this is found right in the
online course right below the sample plain unless let’s kind of evaluate this
together and what I’m going to do is I’m going to type in the stock price
there goes I’m gonna maximize it so we can see it I’m gonna look at the stock
price first stock price we see this 72-69 now one minute or less we’re gonna
have this 72-69 okay stocks earnings per share that’s again
found on the summary page let’s go to the summary page we were already on it
and it says that the earnings per share which is right there is 5:35 okay the
beta there is 0.6 now I’m writing it down myself so I don’t have to go back
and forth so if we fill this in what you’re now going to see is the beta
there 0.6 EPS really being about 5:35 now the VIX is already there I already
put that in tyx the risk-free rate and the years of projected growth we need to
find out two things well the earnings per share growth rate
we already saw what I checked it was about 18% that is found on the
fundamental page what you’re now going to see is if we go to the fundamentals
okay just to kind of show that again go to the fundamentals there it is 18 point
o2 that’s where I got that number to go to the valuation page that’s our last
number and we’re looking for the PE for that industry let’s pull it up see what
we get we’re going to type in the number of 16 now what we’re going to do is go
down to the very bottom and say hey what do we really have right here okay now
look at the chart just like put your technical hat on here okay so the stock
in a longer term upward trend stock cut basing near that longer-term area
support there’s kind of like a longer term bullish MACD divergence then we
actually go run the numbers and say look is there maybe some fundamental backing
here not just we’re not just talking about just
on neighborhood is this something where there’s some fundamental value what’s
the price compared to what we’re paying for the earnings and run the numbers and
so if you’ve ever been to an auction before you can really quickly tell who’s
a professor or not the people who are professionals typically keep bidding and
then realize you can see in their face that they probably have now over bid
okay now there’s a comment that came in and said chug or jpmorgan well wonder if
you ran JP Morgan’s numbers and let’s say the margin of safety was negative
thirty-six percent but chubbs margin of safety was positive twenty-eight percent
is that implying that JP Morgan can’t go up that’s not true that’s not true
JP Morgan can keep going up okay even though it has negative margin safety but
if your goal was to buy where you’re closer to the intrinsic value second
where there is maybe a margin of safety where you identify one stock that has
marginal safety and the other one that does not then you might not pick the JP
Morgan example okay so when we look at the intrinsic value 101 stock price
72-69 margin of safety positive twenty eight point five now what I’m going to
mention here is this stock kind of reminds us of the example of Starbucks
that we talked about two weeks ago where it fell down to that longer-term support
we talked about getting in some but then when it broke out we talked about adding
to the position now when the stock is actually kind of getting whipped to the
downside and that’s kind of what it feels like I mean the stock went from 84
down to almost 65 the stocks getting hurt right shorter-term
if you’re not looking at the fundamentals you probably don’t see
opportunity if you don’t look at the longer-term weekly chart you probably
don’t see opportunity you’re overanalyzing what’s happening on the
short-term chart and you can’t see the bigger picture the value investor is
saying hey I’m going to take that short term pain of a
ice and that could be the next potential opportunity for an entry as a value
investor now if we take a look at this let’s come back to the chart let’s put
this in our example number two so now how do we come to this well we actually
saw Cho we actually went to the analyst reports we said my gosh someone actually
did a lot of work we said jeez could we maybe find other stocks that might have
strong revenue growth second that she has a high earnings yield what’s the
earnings yield again earnings yield is nothing more than earnings per share
divided by the stock price and the more earnings for share relative the stock
price that might be something that has potential value and the other thing is
it actually creates a bigger peer group comparison where you’re probably getting
more apples to apples comparison of these companies do very similar things
which is very important especially if you’re going to compare Pease prices
sales price to books etc very important because you need to compare similar like
businesses now what I’m going to do in this case is we’re just going to show
buying a half of a position and I think this could be done in one of two ways
number one we could just say a not gonna buy the stock until we get above 73
maybe an area of resistance but the value investor might be not so
technically inclined to do that they’re just going to try to buy clothes to
support so what I’m going to do right here is I’m gonna kind of take the kind
of the hat of a value investor that says I’m just gonna try to buy some now okay
when I say some now we’re gonna go right back to those pool balls right there
right there I’m gonna click on that goes two percent click on it again hit it
again dollar sign and all of a sudden we’re
just gonna keep going there’s 10,000 there it is
once we type 10,000 bang there’s a hundred and thirty seven chairs it says
James if you have ten thousand dollars you can buy about 137 chairs at the
current market price why are you buying 10,000 well because we’re saying look
it’s probably still in that base if it breaks out we’re gonna try to have some
extra powder capital that we see if we can’t add to the position like we talked
about on Starbucks in our example then what we’re going to do is going to
come back down to the stop when we talk about an entry we want to pre identify
where we’re wrong now I’d asked you to be prepared to laugh the other day I was
talking to a couple and he was asking about the market he was talking about
entries and we talked about setting stops and he goes he looks at me and
goes why would I set a stop and I said to him and his wife and you would set a
stop because you want to pre identify an area in which you realize you’re wrong
he looks me dead in the face serious and he goes well why would I be wrong his
wife then looks at me and says do you see what I have to deal with no I just
looked at her I said this is probably going to take more than one or two times
she goes do you think okay now a little fun there okay a little fun but now what
I’m going to do is going to go back to where that support level is let’s say
it’s about $70 or so well we take $70 less two to three percent for a stop and
that’s now going to be about sixty eight sixty so now what you’re going to see is
68 sixty day two GT sina member oh this is saying the stock goes to that price
or less we’re gonna sell the stock at that price or less that’s the trigger
price to sell at the market price yeah and Fred it was funny
trust me I I kind of thought how do I get him how how did I even get here
anyway now what I’m going to do is in this gonna go to confirm and said and
there it is right there there’s $10,000 capital okay 137 shares zero for the
transaction fee and now what we’re gonna do is going to put that right in the
section of where it says fundamental class i VG right there
I for income V for value G for growth now if we come back and say send that
order there we go now let’s take a look at one more and I think we could touch
upon this quickly we talked about Starbucks and this had been an example
where it has a very similar chart when we draw that
diagonal support and again we’re talking a little bit more value here you’re
gonna see that the stock really kind of went up up up up and that’s probably
your diagonal line now Starbucks that again that’s going to be in
discretionary for some it might be viewed as staple ish when we take a look
at let’s say the kind of some of the metrics real quick to understand what
we’re buying when we look at let’s say Starbucks and we pull up Starbucks and
just go look at the fundamentals tab just kind of get a quick gist of what
we’re really doing this has more numbers probably a little bit more or more
towards growth this is not going to be as kind of that valuation of a chump or
the valuation of probably let’s say the PGR we saw because that price the
earnings is still higher than the two previous examples so this is more tilted
probably more towards growth if I had another minute or two I like to run this
on that intrinsic value calculator but I would like you to do that because I want
you to kind of become really where you can identify what’s the intrinsic value
what’s the current price premium or discount now the intrinsic value is just
the fundamental numbers what’s the value of the company given complete
understanding based upon the current fundamentals those numbers can change
the intrinsic value is not saying that someone has to pay that they’re just
saying hey that’s pretty much that in terms of value the company right now but
we’re looking to see where the price is in relationship to that and if we can
see that potential value there might be other investors that might see that
value as well last trade we’re going to do here is we’re going to add to that
Starbucks example so we did 118 shares before you see that right there we’re
gonna add to that and what we’re going to do here is we’re going to right click
on the chart by custom with stop now that’s stopped if we go back and say
well where’s the stop can we consolidate the stops well
stop is right about $80 and eighty eighty dollars and eighty eighty dollars
and one cent and come back down to the daily chart and say is there any support
that might be a little bit closer its kind of evaluate that and it does look
like that if we kind of move up to stop a little bit we might set that stop
below let’s say eighty four eleven okay so eighty four eleven setting a
stop below there we probably have about eighty to forty two for this example so
let’s type that in so if we type in let’s say 80 to 40 to stop day GTC now
what you’re going to notice is we’re going to go back to the pool balls again
there’s a percent there’s the dollar amount we’re gonna put in that the other
$10,000 adding to the position the first position that we actually looked at was
118 chairs check since the stock has gone up a little bit higher we’re not a
lot we’re not really buying as many shares as we had before
113 member the stop that’s the trigger to sell the stock at the market price
and now what we’re gonna do is going to go ahead and confirm and send and send
that order now what we’re going to see is we don’t have a transaction fee
because it’s a US base listed equity now what you’re gonna notice is we talked
about today really the stock market derby the Nasdaq and the raw so leading
that higher bait out performance we were not blind to actually what we saw it
actually the tnx we saw a hundred basis point move in interest rates which could
affect financial companies from capital markets industries down to even
insurance companies we said that might hurt more utilities of staples we’d be
watching that and then what we did is we actually talked about using analyst
reports to evaluate maybe an initial stock that we found from doing top ten
analysis but then maybe finding other stocks that also might be attractive and
we actually found PGR because it was just one of the top performing names
from a revenue standpoint but also a bid on margins and also Ernie’s yields
so what I want to do is find a stock that you actually like from a
fundamental technical standpoint go to the analyze fundamental section and look
at those reports and actually look and see if there might be some other stocks
in that same neighborhood where you could evaluate those stocks for
fundamentals and technical setups and I want you to be aware of some of those
things are there singles and reports to think like an institutional or think
like an investor that really has maybe hundreds of millions of dollars because
they’re probably reading those reports and we want at least be aware of some of
the things that they might be thinking as an investor so I’m out of my time
here today and so one thing I just want to make mention of you could also follow
us you could actually subscribe to the channel you could also like us on
Twitter and actually get some of the updates actually posts throughout the
week on my Twitter page and also want to make sure that you are aware of Brett
Morse will be doing an investor Q&A and also the later this afternoon
Michael Fairborn will be doing in class on protecting and enhancing a portfolio
that is actually Michael Fairborn so with that said I’m out of my time here
but I want to make sure think about what we talked about in terms of a routine
what is it that you’re doing on frequent basis to get consistency you don’t want
to be falling short each year of your goal that adds up to be thousands or
lots of thousands or hundreds of thousands of dollars that you’re short
so we want to focus on the consistency of how you’re using an investing process
so remember with what we talked about here today in order to demonstrate the
function of platform we did use actual symbols
remember that TD Ameritrade does not make any suitability of any security or
strategy that is up to you to decide what you want to invest in any
investment decision making yourself direct account is solely it’s up to you
so with that said stay tuned for Brett mores if you have some questions on what
we talked about don’t hesitate on asking Brett Moore
some of the questions he can absolutely go through some of the things that we
discussed here today so with that said stay tuned for Brett mores coming up
right at the top of the hour take care bye bye Oh

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