How to Win Big from ‘Expectations Game’
Oct 1st, 2008 | By Charles Delvalle | Category: Politics & EconomicsOn Monday, we saw the Dow dive 777 points. It was all about expectations, says Charles Delvalle in Investor’s Daily Edge. Figuring out what the market expects can lead to big wins. Failing to do so means you can lose your shirt.
An expectation wasn’t met and a huge emotional reaction followed as investors let fear overtake logic. They thought that we might end up in a crisis as bad as “The Great Depression”. The market sold off in a huge way as a result.
But here’s the thing: emotional decisions can inevitably lead to big swings in any given stock or market. That means there are big opportunities for you to make money.
The lesson here is clear. While it’s important to know the fundamentals of a market or a given company, it’s equally as important to figure out what the markets expect. So the next time you’re looking at a company, try to see what the market expects from them. Then determine what would happen if the company failed to meet those expectations.
If you have a good answer to both of these scenarios, then you should be well positioned to profit regardless of what happens.
Source: The Bailout Blues: A Lesson on Expectations
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Charles Delvalle is a self-taught market-timing professional and value analyst who uses a combination of technical indicators and fundamental research to achieve consistent gains on stocks, commodities and options.
Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering great companies on the cheap. He questions government reports and the status quo. In addition to swing trading options, Charles is also Co-Editor of the monthly advisory service - INCOME.
