Page 65 - Trading #101 Course – Part One: Trading Basics

TRADING #101 COURSE – PART ONE: TRADING BASICS /2017-10-06

• The U.S. unemployment report comes out with a rise in new jobs, and the
economy looks like it is recovering, the stock market rallies.

• The Fed announces a major rise in interest rates, so you go long on bonds.
• Wal-Mart releases higher than expected quarterly earnings, so you go long on
Wal-Mart.
• You research a company and find that its price-earnings growth (PEG) ratio is
less than 1 (meaning it is undervalued), its return-on-equity is better than its
competitors by 25 percent, and its debt-to-equity ratio is 10 percent, so you go
long on that stock.
• Your individual retirement account (IRA) mutual fund holdings are not performing
well; you research to find a mutual fund that has better historical performance
numbers, and switch over to that fund.

The older the news or information, the less value it will have to for you.

It is crucial that you are accessing fundamental data the second it is released, so that
you are in front of the herd when entering or exiting the market. In this regard, it is much
like technical analysis and the importance of having live, streaming, real-time data that
is not delayed.

General types of data, reports, and information used in making fundamental
analysis decisions:
• Weather reports and predictions.

• Federal Reserve reports on unemployment, gross domestic product (GDP)
growth, and so on.
• Federal Reserve announcements on interest rates.

• Corporate annual reports.
• Quarterly corporate earnings reports.

• News services.

• Newspapers, such as the Wall Street Journal and the, New York Times, etc.
• Internet sites.

• On-site physical observations of weather, corporate sales activity, and so on.
Accurate presumptions and assumptions can get you into the market before the herd. In
other words, if you can connect the dots and make accurate assumptions, you may be
able to get a jump on a profitable trade.
Say you can observe weather conditions and effects of such by actually living in Brazil;
you may be able to get more accurate and more pertinent data and thereby make more
accurate assumptions about making trades in the coffee commodities market.

65 | P a g e