Investment stories are fantastic... And a great storyteller can almost always come up with one. Researchers consistently find that stories are especially persuasive, too...
Editor's note: The markets and our Chaikin Analytics offices will be closed tomorrow, April 15, to commemorate Good Friday. Because of that, we won't publish the Chaikin PowerFeed e-letter. Look for your next issue on Monday, April 18.
Some Investments Fail the 'Story Check'
By Marc Gerstein, director of research, Chaikin Analytics
Investment stories are fantastic... And a great storyteller can almost always come up with one.
Researchers consistently find that stories are especially persuasive, too... Folks will often disregard facts in favor of a great story.
Now, maybe you're thinking, "Not me, no way."
But after roughly 40 years in finance, I still find myself persuaded by a great story... only to find when I check the facts later that the story isn't quite as true to life as I hoped.
Thankfully, a simple tool helps me overcome this human failing...
It's the "story check."
First, when someone tells you a persuasive story... enjoy it. Then, after the story is finished, see for yourself if the facts align. It's as easy as that.
I just had to do this the other day. I read a story that I really wanted to be true. But when I ran the story check afterward... it turned out that it was just a good story.
You don't need to find a second job, discover a once-in-a-lifetime value stock, or speculate with cryptocurrencies. Last year, this 94% accurate, crisis-proof strategy handed some Americans the opportunity to make an extra $27,411. And early returns show 2022 could be even better. Complete details are right here.
It could put up to $2,750 in your pocket each year – without making a single investment. And create more new millionaire investors over the next decade than anything else on the planet. Click here for details.
A recent article about Analog Devices (ADI) caught my eye...
Analog Devices operates in the "uncool" part of electronic signal transmission. These days, digital signals get all the glory. But importantly, the story I read reminded me that fans of analog technology could benefit from cheaper stock valuations.
Regular Chaikin PowerFeed readers know I'm a sucker for a deal. And when you combine that with technology from yesteryear beating out the innovative technology of today...
It was a story I wanted to believe!
You see, analog transmission uses a signal in its original form. With audio, for example, a signal is taken directly from a microphone and put on a tape. In either place, it's an analog wave.
Analog needs a bit more bandwidth and can pick up noise. But it's easy to process. And it allows for infinite variety.
That story perfectly teed up a recommendation of Analog Devices. It primed me to expect a strong price chart and a "bullish" or "very bullish" rating in our Power Gauge system.
However, when I ran my story check with the Power Gauge... I was disappointed.
We do see a couple of positives... As suggested by the story I read, sentiment for the stock is generally "bullish" today. The Chaikin Money Flow indicator is "bullish" as well.
But there's a reason the Power Gauge uses 20 factors instead of just one or two...
You can't run the story check by looking at a single factor. You need more data than that when it comes to something as complex as a stock or exchange-traded fund.
Looking further, the company's share-price performance over the past six months is poor. Now, the broad market struggled over that span, too. But Analog Devices underperformed.
I was especially disappointed to see a "very bearish" grade in the price-to-sales ratio factor and a "bearish" ranking in free cash flow. And overall, the Power Gauge rates Analog Devices as "neutral" today.
That isn't what we want to see in a good investment.
Sure, I find the story behind analog investments persuasive. But when I use the Power Gauge for my story check, it tells me that Analog Devices isn't a stock to own right now.
So the next time you hear a good story, ask yourself, "Does it pass the story check?" If it doesn't, just enjoy the story and move on to the next one.
Good investing,
Marc Gerstein
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+1.05%
9
16
5
S&P 500
+1.14%
128
302
66
Nasdaq
+2.03%
13
73
13
Small Caps
+1.90%
270
1116
491
Bonds
+0.20%
Consumer Discretionary
+2.49%
7
30
22
— According to the Chaikin Power Bar, Large Cap stocks are more Bullish than Small Cap stocks. Major indexes are mixed.
* * * *
Top Movers
Gainers
AAL
+10.62%
HST
+8.12%
MAR
+7.54%
LUV
+7.54%
FRC
+6.99%
Losers
ABBV
-4.19%
JPM
-3.22%
PYPL
-2.84%
APTV
-1.77%
LLY
-1.76%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
PGR, UNH
MS, SCHW, STT, USB, WFC
C, GS, PNC
No earnings reporting today.
Earnings Surprises
FRC First Republic Bank
Q1
$2.00
Beat by $0.11
FAST Fastenal Company
Q1
$0.47
Beat by $0.02
DAL Delta Air Lines, Inc.
Q1
$-1.23
Beat by $0.04
BLK BlackRock, Inc.
Q1
$10.42
Beat by $0.28
JPM JPMorgan Chase & Co.
Q1
$2.63
Missed by $-0.07
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+4.19%
Materials
+2.28%
Staples
+1.82%
Discretionary
+0.39%
Industrials
+0.23%
Health Care
+0.01%
Financial
-0.64%
Utilities
-1.09%
Real Estate
-1.72%
Communication
-1.96%
Information Technology
-2.62%
* * * *
Industry Focus
Telecom Services
5
30
10
Over the past 6 months, the Telecom subsector (XTL) has underperformed the S&P 500 by -6.66%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #11 of 21 subsectors and has moved up 2 slots over the past week.
Indicative Stocks
GSAT
Globalstar, Inc.
LUMN
Lumen Technologies,
RADI
Radius Global Infras
* * * *
You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here.
You're receiving this e-mail at diansastroxz.forex@blogger.com.
For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice.
Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors.
Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.
This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
Post a Comment
Post a Comment