NOTICE: Mirror sites are posting this Blog WITHOUT permission! Beware of their content. (Our ORIGINAL blog is http://exposed2009.wordpress.com )
DISCLAIMER: Nothing within here should be construed or implied as investment advice. Consult your broker or financial advisor before you commit any funds. These are opinions, and the expressed or implied opinions are those of the publisher, and information is compiled from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should never assume that recommendations, made now or in the future, will equal performance of recommendations made in the past. The market is full of RISK, and readers assume all liability for any financial decisions and/or investments they make.
Some claim it’s because of “daily” news. Others say because of charting and chart patterns. Still others say that NOBODY knows for sure, and that it’s all random.
None of those are the TRUE reason!
Trust me, when I say that SOMEBODY knows! The stock market, at any one time, is a TRILLION dollar business. Do you honestly believe that “they” would leave it to daily news, chart patterns, or randomness? They wouldn’t, and they don’t.
Notice that suddenly, out of the blue, a rash of buying comes in – for no known reason. And, at a certain predetermined level, selling prevails. Here’s why:
This is a quick lesson in how stock prices are determined, aka “simple” formula. (In reality, it is much more complex)
(Index Price) x ( Earnings) x (Growth Rate) / (Interest Rates) = Fair Value
Index Price = a “floating price” that changes periodically to compensate for the speculative nature and movement in “up” and “down” markets. It relates directly to the Fair Value by a proprietary variable Index.
Earnings = Future Earnings
Growth Rate = Future Growth Rate
Interest Rates = Comparative rate (present and future)
Fair Value = The so-called “norm” value of any stock or index.
“Fair Value” is like the appraisal is to a house. It is a starting point for negotiations. First determine Fair Value. Then, Buyers will bid BELOW the Fair Value, while Sellers will hold out for prices HIGHER than Fair Value.
If the appraisal on a house reads $300,000, a prudent buyer (investor) might bid $280,000. Investors will WAIT until the price comes down to that, before entering the market. And then, they will HOLD and SELL only when the price reaches $320,000.
If enough investors can capture the market, the market will perform exactly as they want. All it takes is PATIENCE.
If a stock’s Fair Value is $50, it’s “buying” level might be $42, and if the stock moves to $59, it would be worth selling. (A cool 40% profit. Do that 2 1/2 time a year, and you’ve doubled your money.)
Lucky that we have computers to do all the math for us. Of course, remember that Earnings and Growth are constantly changing – sometimes from week-to-week, which can change the outcome of the Fair Value, dramatically.
Since large investors, – (i.e. mutual funds, institutions, banks, insurance companies, and even some foreign governments) – trade in 100,000 share blocks, it’s fairly EASY to “capture” the market on actively-traded stocks, and wait for smaller investors to drive the market one way or another.
The market REACTS to the Future Projected Value (FPV)
Where are YOUR stocks today? Buying level? Fair Value level? or Selling level? You’d be surprised! Without Optimization, you really can’t tell by simply looking at the stock’s price.
Now, what determines if a stock will move up or down? The variables – Index Price, Earnings, Growth, and Interest Rates – individually, all can, and will change today’s price.
Since the Fall of 2007, estimates for Earnings have been in a declining mode. It generally follows then, that Growth Rates will also be moving negatively, as well. So, Fair Value has been falling and in retreat.
If Fair Value goes down, so does the immediate Buying and Selling level.
Interest rates have been stuck around 1% by the Federal Reserve. So, interest rates, right now, have minimal effect on the market, or on individual stocks.
Notice that the market, in recent times, moves in a fairly small bracket – about 200 to 300 points a day – either UP or DOWN – fluctuating between buyers and sellers, at the buying level and the selling level. Even speculators can’t push it out of that envelope.
It’s evident that no sustained rally is coming, at the moment, until we see some counter-movement in any of the named variables!
BUT, the market is all about the FUTURE – future earnings, future growth, and future interest rates. Although today’s market “might” look like a bummer, the “future” market – six or nine months down the road – could easily hold something else – for informed investors.
We went into a SELL MODE in the Fall of 2007, and haven’t changed our prognosis since. If the Stimulus and Bailout Packages turn things around, a small change in future Earnings and future Growth can be expected.
When that happens, early investors will see the greatest Bull Market in history.
It’s all about timing and seeing the future – and knowing what Optimization can do for us.
For some stocks, this may be the time to begin Accumulating, while other stocks STILL have a ways to fall. It all depends on whether the stock is in the BUY Zone, or the SELL Zone.
The market is a “calculated” entity – and don’t forget that! It’s NOT random. Insiders use Optimization. Shouldn’t you?
If there were a better, easier, and faster way of tracking the market and individual stocks, we’d be doing it. Optimization certainly beats reading tea leaves, and the proverbial monkey throwing darts at the stock page.
In our recent blog, “The Tarnished Icon”, we discussed how to beat the venerable and revered Warren Buffett. Brokers won’t tell you any of this, and TV gurus and commentators simply don’t know!
To find out how Optimization can help you with your Investment Strategy, and for more information, SIGN UP at our website, http://www.fburg-online.com
Nothing is sweeter than being “on the right side” of the market!
03/06/09 – Optimize! – 1 of 5
By exposed2009NOTICE: Mirror sites are posting this Blog WITHOUT permission! Beware of their content. (Our ORIGINAL blog is http://exposed2009.wordpress.com )
DISCLAIMER: Nothing within here should be construed or implied as investment advice. Consult your broker or financial advisor before you commit any funds. These are opinions, and the expressed or implied opinions are those of the publisher, and information is compiled from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should never assume that recommendations, made now or in the future, will equal performance of recommendations made in the past. The market is full of RISK, and readers assume all liability for any financial decisions and/or investments they make.
Optimization – Revealing A Stock’s REAL Worth!
Don’t you just wonder WHY stocks move up or down?
Some claim it’s because of “daily” news. Others say because of charting and chart patterns. Still others say that NOBODY knows for sure, and that it’s all random.
None of those are the TRUE reason!
Trust me, when I say that SOMEBODY knows! The stock market, at any one time, is a TRILLION dollar business. Do you honestly believe that “they” would leave it to daily news, chart patterns, or randomness? They wouldn’t, and they don’t.
Notice that suddenly, out of the blue, a rash of buying comes in – for no known reason. And, at a certain predetermined level, selling prevails. Here’s why:
This is a quick lesson in how stock prices are determined, aka “simple” formula. (In reality, it is much more complex)
(Index Price) x ( Earnings) x (Growth Rate) / (Interest Rates) = Fair Value
Index Price = a “floating price” that changes periodically to compensate for the speculative nature and movement in “up” and “down” markets. It relates directly to the Fair Value by a proprietary variable Index.
Earnings = Future Earnings
Growth Rate = Future Growth Rate
Interest Rates = Comparative rate (present and future)
Fair Value = The so-called “norm” value of any stock or index.
“Fair Value” is like the appraisal is to a house. It is a starting point for negotiations. First determine Fair Value. Then, Buyers will bid BELOW the Fair Value, while Sellers will hold out for prices HIGHER than Fair Value.
If the appraisal on a house reads $300,000, a prudent buyer (investor) might bid $280,000. Investors will WAIT until the price comes down to that, before entering the market. And then, they will HOLD and SELL only when the price reaches $320,000.
If enough investors can capture the market, the market will perform exactly as they want. All it takes is PATIENCE.
If a stock’s Fair Value is $50, it’s “buying” level might be $42, and if the stock moves to $59, it would be worth selling. (A cool 40% profit. Do that 2 1/2 time a year, and you’ve doubled your money.)
Lucky that we have computers to do all the math for us. Of course, remember that Earnings and Growth are constantly changing – sometimes from week-to-week, which can change the outcome of the Fair Value, dramatically.
Since large investors, – (i.e. mutual funds, institutions, banks, insurance companies, and even some foreign governments) – trade in 100,000 share blocks, it’s fairly EASY to “capture” the market on actively-traded stocks, and wait for smaller investors to drive the market one way or another.
The market REACTS to the Future Projected Value (FPV)
Where are YOUR stocks today? Buying level? Fair Value level? or Selling level? You’d be surprised! Without Optimization, you really can’t tell by simply looking at the stock’s price.
Now, what determines if a stock will move up or down? The variables – Index Price, Earnings, Growth, and Interest Rates – individually, all can, and will change today’s price.
Since the Fall of 2007, estimates for Earnings have been in a declining mode. It generally follows then, that Growth Rates will also be moving negatively, as well. So, Fair Value has been falling and in retreat.
If Fair Value goes down, so does the immediate Buying and Selling level.
Interest rates have been stuck around 1% by the Federal Reserve. So, interest rates, right now, have minimal effect on the market, or on individual stocks.
Notice that the market, in recent times, moves in a fairly small bracket – about 200 to 300 points a day – either UP or DOWN – fluctuating between buyers and sellers, at the buying level and the selling level. Even speculators can’t push it out of that envelope.
It’s evident that no sustained rally is coming, at the moment, until we see some counter-movement in any of the named variables!
BUT, the market is all about the FUTURE – future earnings, future growth, and future interest rates. Although today’s market “might” look like a bummer, the “future” market – six or nine months down the road – could easily hold something else – for informed investors.
We went into a SELL MODE in the Fall of 2007, and haven’t changed our prognosis since. If the Stimulus and Bailout Packages turn things around, a small change in future Earnings and future Growth can be expected.
When that happens, early investors will see the greatest Bull Market in history.
It’s all about timing and seeing the future – and knowing what Optimization can do for us.
For some stocks, this may be the time to begin Accumulating, while other stocks STILL have a ways to fall. It all depends on whether the stock is in the BUY Zone, or the SELL Zone.
The market is a “calculated” entity – and don’t forget that! It’s NOT random. Insiders use Optimization. Shouldn’t you?
If there were a better, easier, and faster way of tracking the market and individual stocks, we’d be doing it. Optimization certainly beats reading tea leaves, and the proverbial monkey throwing darts at the stock page.
In our recent blog, “The Tarnished Icon”, we discussed how to beat the venerable and revered Warren Buffett. Brokers won’t tell you any of this, and TV gurus and commentators simply don’t know!
To find out how Optimization can help you with your Investment Strategy, and for more information, SIGN UP at our website, http://www.fburg-online.com
Nothing is sweeter than being “on the right side” of the market!
This has been another Stock Market Exposed!
Stay Tuned!
Jack
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