| Crunching the Numbers Reading through the academic literature, we can clearly see the idea come to life. A study published by the Journal of Applied Business Research shows that there are two main variables in layoff economics... The first, of course, is the impact the move will have on the bottom line. What will a company save? What will the layoffs cost - immediately and in terms of the future top line? The second variable is a bit more potent. It hinges on how much the market anticipated the news and what the news signals about the company's underlying finances. If layoffs are a big surprise and signal a cash crunch, you can bet share price will suffer. If layoffs have been signaled well in advance and the company makes it clear that its focus is on reining in unnecessary costs, the stock will likely rise. The study had some interesting results. First, it showed the market's initial reaction to news of layoffs tends to stick around. Second, it showed the higher the number of people laid off and the smaller the company, the greater effect the cuts had on share price. So if a small company saw its shares dip after news of large cuts, its stock was likely to trend lower for longer. A large company in the same situation would see a smaller drop. But if a small company saw its stock pop after cuts, its share price was likely to continue to rise... and the larger the cuts, the higher the price went. A Recipe for Strong Gains Intel (INTC), for example, has been in the news lately. It's been telegraphing a large round of layoffs for nearly a month. There's no exact word on the figure yet, but leaders have said the company intends to save some $3 billion next year. It's likely to reduce headcount by more than 10%. It's a big company making big news, and its layoffs will come as no surprise. That's a recipe for a strong gain. History proves the idea. The last time Intel made cuts of this size was in April 2016, when it pushed over 12,000 folks (11% of its workforce) out the door. As the academics tell us to expect, shareholders were rewarded nicely. The chart below shows that shares rose quickly and nearly doubled over the next two years as the company regained its footing. It's good news for investors looking for a bargain. By searching for companies that are restructuring or dramatically cutting costs, we can avoid a lot of the speculation around growth and earnings potential. History tells us that big moves that are well telegraphed tend to treat investors nicely. And the smaller the company making the moves... the better. It's a solid tactic in volatile times. YOUR ACTION PLAN Stocks are crazy right now. I get it. That's why we just did something big. It involves a brand-new asset class... totally outside the traditional stock market. If you're looking for something fresh, something unlike anything you've seen before... check this out. Be well, Andy P.S. Take Trade of the Day on the Go! Whether you're on the road traveling for Thanksgiving or hitting the best Black Friday deals... you can always have Trade of the Day in the palm of your hand by following along on Instagram! The new and improved page offers content that's not featured online - such as educational trading posts, charts, market quotes and even some hard-hitting memes! Click HERE to follow Trade of the Day - it's totally free! | 
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