The brother-in-law is an encyclopedia if you ask him anything about oil prices and petroleum stocks. He can expound for hours about what drives oil prices up and down and why this petroleum company is better or worse than that one. At the same time, he pays scant attention to other industry news. He stubbornly ignores economic and political news and anything to do with world events, past and present. It makes for scintillating dinner conversation.
Investors can avoid risk if they stay alert to negative news affecting their stocks. A right-click of the mouse in VectorVest on any stock you own will lead you to the latest headline news. Last week I wrote about how negative news drove down prices of Valeant, Home Capital and Shopify. Those who acted quickly could take some risk off the table by either selling their shares or buying protection with options. Deficit implosions and structural changes to global economic unions can have far-reaching and long-lasting effects on commodities and industry groups. Think Brexit, OPEC and now possibly NAFTA.
By the same token, astute investors can profit if they stay tuned in to company news, economic news and world events. A dynamic new CEO can lift a stock. New leading-edge technology or unexpectedly strong earnings can drive a stock’s price higher. Federal and local responses to natural disasters and geopolitical unrest means more business and higher stock prices for certain companies. And so on.
So how can we keep on top of it all? You should spend at least a bit of time watching and reading the news. In Canada, we are blessed with outstanding national newspapers and BNN. Even more important, we have VectorVest. Each week, VectorVest Founder Dr. Bart DiLiddo’s essay in the Friday US Views brings us insights on timely economic and world events. The Investment Climate gives us a snapshot of the most important economic numbers. And then there’s the Sector and Industry Viewers. In his October 4, 2002 essay, Dr. DiLiddo writes, “The stock market has a way of predicting the future… Studying the price performance of Industry Groups with VectorVest is like reading Tomorrow’s Paper.”
Don’t believe it? Look at the top six Sectors ranked by RT in Thursday’s VectorVest US. You’ll find Metal Products, Aerospace & Defense, Auto & Truck, Machinery, Paper and Building. These Sector leaders have all been boosted in one way or another by natural disasters or geopolitical concerns. After looking at the industries in these sectors, I was most surprised by Building (MobileMfgRV), but just think about it, the need for quick shelter and all those RV’s destroyed in hurricanes that must be replaced. For more perspective, please read Dr. DiLiddo’s essays of July 27, 2007, March 18, 2011 and August 17, 2012. It all becomes clear. To be a wiser, better investor, we need to Read the News and Study the Views.
Speaking about getting the news, get the inside track on the fastest growing developed market in the world on Saturday, November 4th when you tune in to our monthly INTERNATIONAL ONLINE USER GROUP FORUM. Our keynote presenter, Susan HayesCulleton, Managing Director of VectorVest Europe, will take us on a whistle-stop tour of the geography, history, economy, politics, asset classes and markets of Europe. To attend the live event or get the recording, CLICK HERE TO REGISTER.
Below is a 9-Month Graph of Thor Industries (THO:US). Notice stock price and RT, Relative Timing, started to move higher in June as news of the Hurricane season hit the headlines. As damaged RV’s and Motor Homes needed replacing, the Building (MobileMfgRV) Industry Group, which has eight stocks, started to move up in June in Industry Ranking. Starting at 218th place, its Ranking was 26 by June 21. By September 26 it was the top-ranked Industry Group, a position it has held ever since. It pays to Read the News and Study the Views.