250 likes | 348 Views
Learn about market cycles, investment ratings, and analyst loyalty to navigate the financial world effectively. Gain insights into sector rotation, recession stages, and investment opportunities. Discover the importance of analyzing analyst ratings beyond face value and make informed decisions based on your unique financial goals.
E N D
Common Cents Investment Group Monday January 27th Market Cycles & Investment Ratings
Agenda • Macro Update – Weiyi • Market Updates • Market Cycles – Max • Investment Ratings – Lindsey
Market Update • http://www.cnbc.com/id/101365510 • http://www.cnbc.com/id/101361746
Market Cycles Max Layman Disclaimer: past performance does not indicate future success
Market Trend • Movement in a certain direction over time • Secular – Long time frames • Primary – Medium time frames • Secondary – Short time frames • Identified with technical analysis of charts
Secular Trend • Lasts 5-25 years • Consists of a series of primary trends • Example: Secular Bull Market • Larger primary bull markets • Smaller primary bear markets
Primary Trend • Lasts 1 year or more • Broad support from entire market • Time frame typically talked about in media (i.e. CNBC) • 2013 was a bull market SPY +30%
Secondary Trend • Lasts few weeks to few months • “Market correction” • Markets down 4% in last week
Secondary Trend Cycle http://www.investopedia.com/articles/technical/04/050504.asp
Sector Rotation • Money moving from one industry to another http://blogs.stockcharts.com/.a/6a0105370026df970c01538decb605970b-pi
Full Recession • Bad time to be unemployed • Interest rates falling • Profitable Industries • Cyclicals & Transports (near the beginning) • Technology • Industrials (near the end) http://www.investopedia.com/articles/trading/05/020305.asp
Early Recovery • Rising Expectations • Interest rates bottomed out • Profitable industries • Industrials (near beginning) • Basic Materials • Energy (near end) http://www.investopedia.com/articles/trading/05/020305.asp
Late Recovery • Expectations decline • Interest rates rise rapidly • Profitable industries • Energy (near beginning) • Staples • Services (near the end) http://www.investopedia.com/articles/trading/05/020305.asp
Early Recession • Bad for overall economy, low expectations • Interest rates peaked • Profitable industries • Services (near the beginning) • Utilities • Cyclicals & Transports (near the end) http://www.investopedia.com/articles/trading/05/020305.asp
Kandi Technologies [KNDI] • Electric Vehicle (EV) technology • Renting cars • Cheaper than a taxi • Return to garages • Similar to Car2Go • Car vending machine http://www.youtube.com/watch?v=fiEJPbxL2hI
Investment Ratings Lindsey Kathmann
Warnings of Investment Ratings • Quantity is no guarantee of quality! • Analysts opinion is not the end all be all. • 2 Warnings: • Analysts' ratings do not have clear, standardized meanings. • Potential conflicts of interest that you, as an investor, should be aware of in assessing the usefulness to you.
Understanding the LanguageDifferent terms mean different things to different analysts http://www.marketwatch.com/tools/guide.asp
Understanding Analyst Loyalty • Some analysts can be unaffiliated but most are affiliated with financial institutions • Mutual Fund/Hedge Fund • Provide financial advice for intuitional clients whose investment decisions are usually much different than ordinary investors. • If the fund has a large holding in a particular stock, they do not want a “Sell” rating, so an analysts may put a “Hold” rating on it. This can cause inflation. • Analyst Compensation • Compensation can pressure analysts to report positive research • Ownership Interest in the Company • Analysts may hold stock in the company and do not want to see the rating go down.
Key Tips • Never rely on a rating alone. • Look at the entire report-not just the one word. The report will include risk factors you can use to help you make a decision. • Analysts differ in quality. • Not every analyst is the best. You can look up different analysts records online. • Is it right for YOU? • Your individual financial need is what matters most. Make sure you view each rating in terms of your unique financial situation. Bought:$10.56Sold: $13.87 Gain: ~31% over 2 yrs. Bank of America (BAC)
Stock Analysis Soda Stream