Throw Fundamental Analysis Out the Window
It’s officially time to throw fundamental analysis out the window.Looking for undervalued companies in a market like this, is like looking for hay in a stack of needles. Practically EVERY stock out there is undervalued on some metric. And with the S&P 500 down 20%, fundamental investors are foaming at the mouth. Some have even been riding this decline the whole way down. But that doesn’t mean even GREAT stocks won’t fall a LOT farther from here. Look, I get it. I used to be a fundamentals guy, myself. It’s exciting to think you’re right about a stock that everyone else is getting wrong. But eventually, I was spending more time trying to be right than actually making money. I realized there’s a better way to gauge the market… a surefire method to value every stock out there. And it all comes down to one thing: price action.
Price Action Never Lies
Fundamental analysts break down the core value of a stock given the current market dynamic, including interest rates and earnings multiples.catch up on all my latest videos right here, 100% for free. There may even still be some actionable trades in there… While you’re there, be sure to like the video and subscribe to our True Options Masters YouTube channel so we can keep sharing more content like this.When a stock starts to sell off, they say it’s “undervalued” — because the data hasn’t caught up to the price drops. And they keep saying that as they buy the stock all the way to the bottom. Now, at some point, they’ll be “right.” They can claim they bought a stock right before it bounced, all thanks to fundamental analysis… But what they fail to mention is how much they lost on the way down. I prefer to avoid this game altogether. An undervalued stock is usually undervalued for a reason. And, frankly, the market doesn’t care about your opinion. Even if you’re convinced a stock is undervalued, it doesn’t mean the market will agree with you. It could keep falling further and further. But price NEVER lies. It’s the only immediate gauge we have on the entire market. Your shares are worth whatever someone else is willing to pay for them. Simple as that. And in a bear market like this, it’s more important than ever to understand how to break down price charts. When you know what to look for, you can find critical levels to watch. These levels will help you stay one step ahead of market rallies — and show you which stocks to avoid completely. This is exactly why I started my Bank It or Tank It series on YouTube. I share quick, to-the-point takes on YOUR favorite stocks, showing you how to analyze price action to find winning trades. And you can
Regards,Chad Shoop, CMTEditor, True Options Masters
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.