10/25 Daily Market Note: Markets decide to take the glass half-full sentiment after Microsoft & Google earnings
10/25 Premium Strategy Note: Don't be too pessimistic.
Note to readers: Remain optimistic. In the longer-term, accumulating stocks when the market becomes fearful is when money is made.
Folks-
As discussed in a previous note, I was very skeptical about the sharp recovery that long-duration Bonds made earlier this week (even though I am long-term bullish on Bonds). Today’s session is a reversal of that initial enthusiasm, but not all hope is lost. Heat in the market is being turned up very high in this session, but stay the course, and much will improve in simply a few weeks.
The market is rewarding some of my existing opinions issued about 3 weeks ago regarding positive commentary/adding exposure to Pinduoduo, New Oriental, Starbucks, McDonalds, and Netflix– among others. Their relative strength in the context of recent adverse moves in the broader index is continual validation that DCF Modeling is an investor’s key tool to go towards stock-selection as long as one has an intermediate-term timeframe. I spend an enormous amount of time testing various assumptions, and it is reflected in the form of relative strength. I stand by new ideas issued, and believe that the only factor that separates the current level and my price targets is simply time. We are in an extremely challenging market environment. I will continue to try to find ideas, but we need to see decline velocity slow down first.
In this note, I’m going to discuss a special topic regarding Options. It’s one of the more advanced strategies that I periodically employ. It is suitable for Larger Players, and I believe that this is essentially what Market-Makers do. The reason I share this is that I believe in order to survive multiple types of market environments, we have to have a particular tool to navigate them individually. The more skills you have in your toolset, the greater odds of long-term success.
Let’s dive in.