A Lesson On Value And A Possible Investment Pick

Today’s market lesson in investing is about finding value in the right companies. Many people recognize brand names and see value if the company’s stock price is lower than usual. Yet the market is fast-paced these days, and people don’t always dig into the charts. A mentor of mine once told me to look at the chart for a company in terms of one business cycle, which is 10 years. That is where you really get to dig into the data.

Even if you’re a trader, looking into a company’s business cycle can give you a better idea of where revenues are heading. You can’t simply look at a company’s 1-month chart and suddenly get a feeling that the price is going to be on the rise soon. Investors win and lose all the time. Even when looking at a business cycle, they can make the wrong decisions about companies.

A good example of this is GE. Not too long ago, I made a call on GE that was based on the stock tanks in recent months and what I felt it was going to do in the future. It was subsequently taken from the DOW 30, and the price has continued to tank, all the way down to nearly a 10 year low. Granted, I still believe GE to be a valuable company that is just having issues, but the time to buy wasn’t then.

Perhaps it is now, with the company’s stock selling at the same level it was at the start of the last business cycle. It is impossible to know for sure, and that is why investors must choose to make moves that they believe in. It’s hard to do that when you’re in and out of trades all the time. That is why I prefer investing over day trading.

Yet investors can become more emotionally attached to what they are doing, too. There have been good moves brought to my attention, like Sirius and Turtle Beach, and there have been bad ones, like GE (so far) and some others. The market is also in a recent correction, which doesn’t help GE.

GE also reported a less than stellar Q3, combined with the fact that the company slashed its dividend to a penny per share. At some point, you would think that a brand like that is going to turn itself around. That’s my investing news for the day.

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