Investing is not a game or a gamble. It's about research, and if you're opposed to doing any, then save yourself time and just buy lottery tickets.
Peter Lynch once said, “Investing without research is like playing stud poker and never looking at the cards.”
If you’re wary of doing hard work—of getting your hands dirty doing some research—then I don’t think investing is for you.
It’s not a game. Or a gamble.
I know people who complain that the market is “rigged” or that the “odds are stacked against you.” That you can’t win.
On Wednesday, Smith & Wesson Holding Corp. (Nasdaq: SWHC) shot up 16%.
A week before that, Abercrombie & Fitch (NYSE: ANF) popped 11.25%.
OmniVision Technologies (Nasdaq: OVTI) shot up more than 13%.
From its close on Feb. 13 to the end of trading on Valentine’s Day, Cray (Nasdaq: CRAY) soared 39%.
And 2 days before Cray’s big move, Conversant (Nasdaq: CNVR) —formerly ValueClick—spiked 17%.
These were all one-day moves. Big single-day surges. Now, were investors in these companies just lucky? Did they just happen to be in the right place at the right time?
Was it merely chance?
Or is there a way to predict which companies are going to not only beat Wall Street expectations—but actually obliterate them?
I’ll let you in on something: Because of peculiar trends in their stock price after earnings releases, most of these companies I mentioned were in my Oxford Club trading service, Emerging Trends Trader.
Let’s look at a chart of Cray’s quarterly revenue:
It was estimated to make $300 million in the fourth quarter of 2013. On Feb. 13, the supercomputer maker reported $307 million…
Abercrombie & Fitch’s quarterly revenue chart looks similar to Cray’s:
But if you take a few extra moments—if you spend a little time digging—you start finding even more valuable pieces of information.
One of them: Since 2008, during the trading day following its fourth-quarter earnings release (including this year), shares of ValueClick/Conversant have gained double digits 4 times out of 6.
And only once in those 6 years did shares fall on its fourth-quarter report.
That’s a handy—and profitable—piece of information, uncovered by a bit of research, to have in your back pocket. And if you’re willing to dig even deeper, you’ll discover that there are real reasons why these pops happen.
It’s also handy to know that, since 2008, shares of Conversant have never risen following the company’s second-quarter release.
Investing isn’t all gut feelings, whims and trying to hopefully channel “the Midas touch.”
It’s about research.
It’s about taking the time to understand what moves the shares of the companies you are investing in and why… Knowing where the trouble spots are… Understanding when the best time to buy is…
That’s how you make money investing.
Otherwise, save yourself the frustration and just buy lottery tickets.
Matthew Carr is a part of the Investment U research team. You can read more by Matthew here.
The information contained in this article should not be construed as investment advice or as a solicitation to buy or sell any stock. Nothing published by Physician’s Money Digest should be considered personalized investment advice. Physician’s Money Digest, its writers and editors, and Intellisphere LLC and its employees are not responsible for errors and/or omissions.