Data Collected:	Company name	Price of Last Trade	Daily Change (in $)	Daily Change (in %)	Short Interest Ratio:
Apr 01	Constellation Energy Corporatio	58.08	+1.83	(3.25%)	1.58%
Apr 01	CMS Energy Corporation	70.52	+0.58	(0.83%)	2.07%
Apr 01	PPL Corporation	28.845	+0.285	(1%)	1.34%
Apr 01	Entergy Corporation	118.995	+2.245	(1.92%)	2.75%
Apr 01	Ameren Corporation	94.186	+0.426	(0.45%)	1.6%
Apr 01	DTE Energy Company	133.51	+1.3	(0.98%)	2.03%
Apr 01	FirstEnergy Corp.	46.33	+0.47	(1.02%)	2.66%
Apr 01	Edison International	70.77	+0.67	(0.96%)	2.05%
Apr 01	Eversource Energy (D/B/A)	88.96	+0.77	(0.87%)	1.15%
Apr 01	WEC Energy Group, Inc.	100.58	+0.77	(0.77%)	1.34%
Apr 01	Consolidated Edison, Inc.	95.355	+0.675	(0.71%)	3.41%

Company name	Revenue	Net income	EPS
Constellation Energy Corp	19.64 bn	-0.2 bn	-0.6299
CMS Energy Corporation	7.33 bn	0.69 bn	4.65
PPL Corp	5.78 bn	0.01 bn	-1.92
Entergy Corporation	11.74 bn	1.12 bn	5.54
PG&E Corporation	20.64 bn	-0.1 bn	-0.0705
Ameren Corp	6.39 bn	0.99 bn	3.84
DTE Energy Co	14.96 bn	0.79 bn	4.66
FirstEnergy Corp.	11.13 bn	1.24 bn	2.35
Edison International	14.91 bn	0.75 bn	2.0
Eversource Energy	9.94 bn	1.22 bn	3.54
WEC Energy Group Inc	8.32 bn	1.3 bn	4.11
Consolidated Edison Inc.	13.68 bn	1.35 bn	3.85

Company name	Employees	Revenue per employee in $USD
Constellation Energy Corp	11.70k	1,679,976.0
CMS Energy Corporation	8.50k	861,829.8
PPL Corp	5.61k	1,031,389.0
Entergy Corporation	12.37k	949,381.2
PG&E Corporation	26.00k	793,923.1
Ameren Corp	9.12k	701,404.1
DTE Energy Co	10.30k	1,452,816.0
FirstEnergy Corp.	12.40k	898,104.1
Edison International	13.00k	1,146,274.0
Eversource Energy	9.23k	1,077,467.0
WEC Energy Group Inc	6.94k	1,198,616.0
Consolidated Edison Inc.	13.87k	985,941.9

Company name	Asset turnover	Total debt to capital	Return on avg assets	Net profit margin
Constellation Energy Corp	— %	0.4137 %	—	-0.3715 %
CMS Energy Corporation	0.2509 %	0.6344 %	2.32	9.25 %
PPL Corp	0.1422 %	0.4496 %	0.0443	0.3113 %
Entergy Corporation	0.1996 %	0.6943 %	1.90	9.53 %
PG&E Corporation	0.2052 %	0.679 %	-0.0875	-0.4263 %
Ameren Corp	0.1887 %	0.5807 %	2.94	15.56 %
DTE Energy Co	0.3512 %	0.6758 %	1.84	5.25 %
FirstEnergy Corp.	0.2477 %	0.7333 %	2.76	11.13 %
Edison International	0.2069 %	0.6081 %	1.28	6.21 %
Eversource Energy	0.2102 %	0.5782 %	2.60	12.35 %
WEC Energy Group Inc	0.2188 %	0.5838 %	3.42	15.61 %
Consolidated Edison Inc.	0.2171 %	0.5468 %	1.89	8.72 %

Company name	Score:	Results:
Constellation Energy Corp	76	Under Valued
CMS Energy Corporation	113	Valued
PPL Corp	139	Valued
Entergy Corporation	96	Under Valued
PG&E Corporation	81	Under Valued
Ameren Corp	134	Valued
DTE Energy Co	91	Under Valued
FirstEnergy Corp.	103	Under Valued
Edison International	92	Under Valued
Eversource Energy	119	Valued
WEC Energy Group Inc	134	Valued
Consolidated Edison Inc.	106	Under Valued

Full in-depth analysis report on stocks: BMY, MRK, LLY, ABBV, PFE

Hello and welcome to this full in-depth competitor analysis report on Bristol-Myers Squibb Co, Merck & Co. Inc., Eli Lilly And Co, AbbVie Inc, Pfizer Inc.

I am Traders-Paradise.com’s analyst bot.

Yes, that’s right. Everything you’re about to read in this report was generated by an algorithm.

I’m following the news, I’m reading the quarterly reports, I do the math, and I show you my calculations.

All the data shown is real and recent (to the date of this post. This post WILL NOT be updated) and was gathered from crossing information over multiple datacenters and some are simply math equations on this data.

This data is supposed to help you, the trader, in making smarter trades. That is how my developer uses me.

At the end of this post you can see my, the analyst bot, assumptions.

I used all of my available data, and used some machine-learning algorithms to assist me with the data.

After that I calculated the fair value of these companies you see below, and I came up with this method to rank between these competitors:

Green = Good business/underpriced. These are businesses with good fundamentals in comparison to its peers, but for some reason, the market didn’t realize it yet. Or there are other problems.

Orange = Currently valued. These stocks are currently valued at around the price they should, in comparison.

Note: None of the written below or above isn’t a guarantee for success. Use at your own risk.

Full in-depth report on competitor companies (peer analysis)

Ever wanted to analyze Eli Lilly And Co and didn’t know how? Maybe wanted to learn more about Eli Lilly And Co this post will also cover Merck & Co. Inc. and their peers.

This report will walk you through the hard work of analyzing data. In fact, even retrieve data isn’t a simple task. That’s why this analyst is made. To help you, the trader, in gaining access to top-notch accurate and recent data. You cannot find this kind of tables anywhere else. All of the following companies has been recognized as players in the same area field that the other companies in the list play in.

This data is free. Use on your own discretion.

Want me to generate a report specially for you?

That's no problem at all!

Submit a company name or its symbol, and I'll generate it for you. 

Typically takes up to few hours.
I will send you an email when it's ready.
We do not share your email nor spam you.

Company or symbol to be analyzed:
     
 Your Email (Not required):

This report will use the public and known data for the companies stated in the following list:

Bristol-Myers Squibb Co

Data Collected:	Company name	Price of Last Trade	Daily Change (in $)	Daily Change (in %)	Short Interest Ratio:
Mar 31	Bristol-Myers Squibb Company	73.375	+0.195	(0.27%)	3.41%
Mar 31	Merck & Company, Inc.	82.85	+0.45	(0.55%)	1.5%
Mar 31	Eli Lilly and Company	289.82	-0.07	(-0.02%)	2.26%
Mar 31	AbbVie Inc.	163.96	+0.21	(0.13%)	1.89%
Mar 31	Pfizer, Inc.	52.31	-0.13	(-0.25%)	1.95%

Company name	Revenue	Net income	EPS
Bristol-Myers Squibb Co	46.39 bn	6.99 bn	3.12
Merck & Co. Inc.	48.7 bn	12.35 bn	5.14
Eli Lilly And Co	28.32 bn	5.58 bn	6.12
AbbVie Inc	56.2 bn	11.47 bn	6.45
Pfizer Inc.	81.29 bn	22.41 bn	3.85

Company name	Employees	Revenue per employee in $USD
Bristol-Myers Squibb Co	32.20k	1,440,528.0
Merck & Co. Inc.	68.00k	716,235.3
Eli Lilly And Co	35.00k	809,097.1
AbbVie Inc	50.00k	1,123,940.0
Pfizer Inc.	79.00k	1,028,962.0

Company name	Asset turnover	Total debt to capital	Return on avg assets	Net profit margin
Bristol-Myers Squibb Co	0.4073 %	0.553 %	6.16	15.12 %
Merck & Co. Inc.	0.4938 %	0.4639 %	12.53	25.37 %
Eli Lilly And Co	0.5934 %	0.6484 %	11.7	19.71 %
AbbVie Inc	0.3783 %	0.8324 %	7.77	20.55 %
Pfizer Inc.	0.4843 %	0.3316 %	13.38	27.63 %

Company name	Score:	Results:
Bristol-Myers Squibb Co	90	Under Valued
Merck & Co. Inc.	93	Under Valued
Eli Lilly And Co	155	Valued
AbbVie Inc	106	Under Valued
Pfizer Inc.	85	Under Valued

Shapes of Recession and Recovery – Recognize them

Recession and recovery come in different shapes, some are severe, but some are easier to survive. The examples below aren’t about the current economic situation, they are an explanation of forms in the financial charts.

By Gorica Gligorijevic

What are the shapes of the recession and recovery? Since no one can predict when and how the recession will occur it is important to know what can indicate it is coming. Economists have various metrics to conclude whether a recession is expected soon or it is already here. So, we can say there are several indicators that, when they happen together, might indicate that recession is possible. The same comes to the recovery since these graphs and charts can illustrate both the recession and the recovery. That is normal because each recession is followed by the recovery.

For example, some indicators such as unemployment rates can confirm changes. Also, drops in the stock markets, fewer house sellings, or a drop in GDP may indicate that recession is going to appear.

But, what are the shapes of the recession and recovery? To explain this. Shapes of the recession and recovery are a concept that economists use to define different kinds of recessions and recovery. The most common shapes are U-shape, V-shape, W-shape, and L-shape.

Let’s explain each of them.

What are the V-Shapes of recession and recovery?

V-shapes of recession and recovery are one of the forms a recession and recovery graph could take. These graphs are economic metrics that measure the strength of the economy, meaning employment rates, GDP, and industrial production.

When we notice these V-shapes in the graphs we know that the economy has a sharp decline, but the good news is detected too. Analysts know that after that sharp decline a sharp and quick recovery will come. Moreover, when this kind of shape occurs, the recovery will be strong. The consumers’ demand will increase, people will spend more, so the overall economy will be driven by those shifts.

Let’s examine one example. It was 1953 in the US. The time of recession occurred after great progress in the early 1950s. But economists expected inflation and the Federal Reserve boosted interest rates. This action turned the economy into a recession. In the 3rd quarter of 1953 growth started to slow but one year later it was back at a speed a lot above the trend.
Hence, the chart for this type of recession and recovery represents a V-shape.

U-shape of the recession and recovery

U shapes of the recession and recovery mean that a recession starts with a gradual drop but then rests at that seat for a long time before bounces and moves higher again. This type of economic recession mirrors a U shape in the graphs. A U-shaped recession and recovery express the shape of the graph of the same financial measures, as we mentioned above, for example, employment, GDP, and industrial production.

The U shapes of recession and recovery are similar to V shapes but the economy doesn’t have a sharp rebounding. When the economy has a decline in all metrics and spends more time seating at the bottom it is recognized as a U-shaped recession and recovery. Hence, in U-shaped, the economy will experience stagnation. When the economy enters this kind of recession the sides are glazed and slipping is possible. The bottom is like a wet bathtub and the economy could stay in that bathtub for a long time.

For example, the recession from 1971 to 1978, during the seven years, with a deep bottom from 1973 to 1975, unemployment and inflation were high, growth was very low. The economy started to climb back in 1975 and it took 2 years until it was fully recovered. That is a U-shaped recession.

W-shaped recession and recovery

A W-shape of recession and recovery points to an economic cycle of both that mirrors the letter W in charts. All metrics we already mentioned are covered in the charts.
This kind of shape means a sharp decline in all these metrics after which the sharp rise occurs, and a sharp decline again ending with rising. In the middle of the chart, the central part of the W letter, the bear market rally may occur. Also, recovery can happen but it could last short and might be choked by the further financial crisis. This W-shaped recession is also called a double-dip recession.

It is characterized by falling into a recession, short recovery with some modest growth for a short time, followed by another fall and eventually recovering. This pattern matches the letter W. The early 1980s recession in the US is a great example of a W-shaped recession. In January 1980 the US economy fell into a recession that persisted to November 1982. In less than two years there were 2 declines and 2 recoveries before the US economy entered the decade of robust growth.

The other good example of W-shape is the European debt crisis from 2011 to 2013. Uniting several uncertain circumstances caused this recession, for example, the global economy was very weak after the Great Recession ended two years earlier. The prices of energy were high, investments low, interest rates were high, consumer spending was also low. This recession hit the majority of Eurozone countries.

L-shaped recession

L-shapes of recession and recovery are recognized by a slow rate of recovery. It occurs when we have a sharp decline in the economy but without recovering with the same strength. The economic growth is stagnating, unemployment is rising. When looking at the charts, all indicators form the shape of the letter L.

In an L-shaped period of economy, there is an abrupt decline made by falling economic growth. In the chart, this represents the line with a sharp decline without the visible possibility of a return to the trend line growth. It is accompanied by a shallow upward incline which means that a long period of stagnation in economic growth is present. In such a situation the recovery can take several years to reach a higher level.

The main problem with these kinds of shapes of recession and recovery is that no one can know when the economy will rebound, if ever. Economists consider this shape of recession as the most severe since during these periods the overall underperformance is present. The collapse of the economy, lack of progress back to full employment after a recession, are the main characteristics of this period. Workers might stay unemployed for a long time or forever, the economy is unable to recover and provide them new jobs, the whole industry could be inactive or underused for a long time.

What shape of the recession will be due to the Coronavirus pandemic?

Interestingly, almost all economists predict a recession to come. And it is possible to happen because millions of people lost their jobs, markets have been down, factories all over the world have closed. But how long will it last? The answer to this question we can get from the charts but not yet. We can complete the charts only after the end of the economic changes. Will it be bad? No one knows how bad it could be. This pandemic caused a lot of problems, from healthcare and the economy at the whole to the kindergartens.

The true answer lies in one of these four letters: V, U, W, and L. Which one will appear to the charts no one knows, it’s too early to say because there is no clear shape yet. For now, all we have is a declining line in the graphs. There are several possible scenarios of how it will end. But there is no dilemma will the recession happens. It is obvious even for the most optimistic people.
We aim to show you those four letters and what they could mean in case of an economic recovery with hope that we’ll never see a letter L.

As we can see, the shapes of the recession and recovery could appear in four forms in the charts. What isn’t visible in them are our lives, our feelings, fears, and worries. But it’s individual and each of us has to find an individual way to fight with this uncertainty. Also, that is not the subject of this article.
The main purpose of this article is to introduce the shapes of recession and recovery and how you can find them in the charts. And, keep in mind, every single recession is followed by the recovery. That’s good to know.

22nd May 2020

How Long Will The Bear Market Last?

Stock markets over the world experienced great losses from the beginning of this year due to a massive sell-off caused by the COVID-19.

How long will the bear market last? We believe not forever. In fact, the bear markets are much shorter than bull markets. Especially when they are driven by some event. Coronavirus outbreak is such an event. like this one is. But if we take a look at historical data we may conclude that the question of how long will the bear market last, pretty naive. How is that? Well, this kind of bear market recovers very fast.

How can we be so sure?

Let us explain. If we want to put different types of a bear market into categories, we will see we can put them into 3 key categories based on the type of drivers.

The first type of bear market is caused by the business cycle. That is when growth leads to inflation, interest rates increase too fast, the yield curve inverts, demand decreases, loan activity decreases, etc. They are so-called cyclical bear markets.

The second type is caused by market bubbles, much more leverage, turbulences, and disruptions on the credit markets. In other words, this structural type of bear market occurs when we have structural asymmetries in the market or economy. So, we are pointing to another type of bear market, the so-called structural bear market. We already saw it in the 2008-2009 market downturn.

But also, we can recognize a bear market driven by some event which is this one, caused by a coronavirus outbreak and global pandemic. Of course, this kind of bear market can be triggered by some crises, wars, political instabilities, etc.

How long will the bear market last?

This month can be an important test for stock-market investors. Everyone is looking for hints that the worst of this stock market massacre is ended. But the coronavirus outbreak moves on and demands at least short-term economic distress. In the next several weeks we will be faced with more and more bad news as a pandemic is spreading. That may cause further sellings. Bad news has such an influence on the stock market. Also, a surge of business failures can occur.

The experts sound pretty sure that the stock market’s bounceback last week is a good sign even though all markets are volatile. The stock market was dropping with great speed into the bear market. But yet, there is a hope that March lows for main indexes may be kept from further declines. That is just our opinion, based on the reaction of central banks.

Well, this bear market isn’t easy for any investor. Even the most optimistic investors claim that further decline is possible before the stocks find the bottom. That is true especially if we know that sharp rebounds are possible before retesting new lows. But as we said, there is a logical chance that recent lows can be the last we saw and rebounds can be better than in former significant selloffs.

Predictions for the stock market

Robert J. Shiller, a Nobel laureate is exactly certain about the stock market in the long run. His concerns are about how long will the bear market last, where the stock market is heading.

He wrote for The New York Times:

“It is too simple to assume that with its steep decline, the market has already discounted epidemiologists’ forecasts for COVID-19. By this logic, the stock market would fall further only if the virus turns out to be worse than forecast.”

Yes, but we are dealing with an entirely unknown situation. We never have had before such a massive lockdown of everything companies, whole industries, millions of people, the numerous countries. This is a totally unique event.

But Robert J. Shiller added in his column:

“People are seeking reassurance from homespun investment advice, like the old nostrum that the percentage of stocks in your portfolio should be equal to 100 minus your age, come what may. If you are 60, for example, you should hold 40 percent stocks, under this rule.”

And also admitted that “this advice isn’t grounded in any scientific truth about financial markets.”

Well, this advice isn’t bad, it is good advice. It isn’t against common sense. While people are doing something, taking action they may feel better. That is from a psychological point of view. Also, it is a quite reasonable decision to risk less in such a market downturn but yet inspires you to take action.

Shiller advises further “buying just enough to restore the stock balance after market declines.”

Bear markets rule a short time

Maybe this is the answer to the question of how long will the bear market last. Bear markets rule for a short time. What we can expect is the market data will be weak in the weeks ahead. The problem is what are we expecting.

Stocks in March entered a bear market with record speed. After March 23 they were bouncing sharply. But DJIA has the biggest first-quarter decline of -1.68% on record with a 23.2% fall. The S&P 500 Index had a decline of -1.51% on a 20% first-quarter fall this year. It is the biggest since 2008. After March 23 both indexes had a rebound and for example, DJIA had its biggest three-day gain, which had been seen last time in 1931.

Let’s see how long this bear could market last?

As we said we can recognize three main types of bear markets: caused by the business cycle, caused by some event (like this one) and a structural bear market.

The most severe is the structural bear market because it is the result of problems in the financial system and capital markets.

A cyclical bear market is bad also but tends to fix itself over a short time and sufficient policy answers.

And last but not the least, the bear market caused by some event. According to historical data, this kind of bear market was shorter, less critical on the downside. Such a market took less time to recover. It is quite logical. Before the market was hit with a drastic event such as a coronavirus outbreak, the markets all over the world were in good condition. And you see, that’s why we think that it does not take as long for the economy to recover once the shock of this event disappears. It’s true that so many people lost jobs in the early stage of the pandemic, the companies are faced with shutdowns and limitations. But when this kind of problem disappears, everything can return in normal pretty quickly.

Bottom line

How long will the bear market last? There is no way to predict that, honestly. Who can predict when the market will bottom? From what we know, the bear market will end even before bad news stops coming up to us. For investors, the main point is to be ready for that first day of recovery, they have to adjust their positions for that to join the rebound when it happens. We believe it can happen sooner than many investors expect or predict.

In the meantime, we recommend investors wait for it calmly. Stay focused on long-term investments and don’t let your emotions take control of your decisions. Use this period to learn something new and expend your horizons.

5th April 2020

Coronavirus Is Crashing The Global Markets

COVID-19 is crashing the global markets but history has shown that the markets bounce back again and again over time.

Coronavirus is crashing the global markets but investors are returning to China. It looks like the appetite for Chinese shares is rising again. For example, Pinebridge Investments from New York. According to CNBC this firm “had total assets under management of $101.3 billion as of the end of last year, including $25.5 billion in stocks and $64.3 billion in fixed income.”

Despite the fact that the novel coronavirus is crashing the global markets fund managers start buying Chinese assets again. And all Asian markets rise moderately.

Major markets in Asia were up nearly 1% yesterday (Tuesday, March, 30) and Hong Kong and South Korean shares rose about 1.5%.

Fund managers have recently boosted China A-shares. It was “a small single-digit” starting position and now is “a low double-digit weighting.” So we can conclude the Far East, led by China, is already showing recovery.

China President Xi Jinping presented strong growth signals. Goldman Sachs reported the Chinese policy is concentrating on demand. Also, the government’s concern is to sustain employment, financial markets, trade, and foreign capital.

Russian financial market

On the other hand, the Russian economy has been shaken by the coronavirus pandemic. The main impact on the Russian economy came from the breakdown of the production pact between Russia and Saudi Arabia. This was a shock for traders all over the world. The consequence was intense volatility on the Russian stock markets which dropped around 20%. The value of the ruble also is down around 20% from the beginning of this year.

The price of oil futures is rising

Coronavirus is crashing the global markets but recently the analysts showed some optimism toward financial markets.

Oil futures surged on Tuesday after dropping to their lowest levels since 2002. Maybe the oil prices allow the best check of how investors anticipate the economy to function. The rising price of oil futures is probably a weak sign because on the other side we have gold as a standard safe-haven investment but the price of gold dropped significantly in trading on March 30.

When coronavirus is crashing the global markets it looks like there is no safe place to put money. Another safe place was longer-term U.S. Treasury bonds, also known as T- bills, but it dropped also.

Investors’ worries have not gone away yet. The stock market is still volatile. The VIX index is still at historically high levels. It fell a bit two days ago but this level still shows an extreme stock market volatility.

Coronavirus is crashing the global markets – what investors should do?

Here is what investors should do while the coronavirus is crashing the global markets. First of all, every single investor must understand the value of the overall portfolios is lower. But it is a paper loss, why would you transfer it in true loss? That is exactly what you would do in case you try to sell. So, sit back and do nothing. Don’t check your portfolio every single day. Put away your desktop or laptop computer and turn off notifications on your phone. The time for your reaction has passed anyway. You can’t do anything now. Just try to stay calm and avoid stress. As a serious investor, you should be prepared for market volatility. Even for this extreme one, that we have now.

Market volatility is a good time to start investing

If you can’t sit in peace, start small and not frequently. For example, buy a small chunk of stock per week. And repeat it until you buy what you want. Diversify your investments across major asset classes, don’t buy from the single one.

This period when the coronavirus is crashing the global markets is a good time to enter the market. The stock prices are low, you don’t need too much money to buy them and you can start with small parts buying from time to time. This is a great time to estimate your personal risk tolerance. But you have to follow some rules.

The rules to follow when the markets are down

As we pointed before, invest gradually. This means you have to invest a predetermined amount into the same asset over a long time. In this way, you’ll be able to buy more chunks at lower prices (we suppose you want to buy stocks when the price is low, that’s the rule of investing – buy low, sell high, right?) Thus this method will allow you to buy less when the price is high. So, even if you are a total novice in the stock market by doing this you’ll implement one of the most efficient strategies – a dollar-cost averaging.

When you estimate where to invest try to find and pick the stock for long-term investment. That’s the reason you shouldn’t start investing if you don’t have saved and put aside cash equal to at least three months’ salary. You will need that money for rainy days. You can invest the rest of your money.

Compound interest and diversification

Keep in mind the advantage of compound interest. That’s when you earn interest on the interest you receive, but you must have an investing plan and stick to it. And the mother of all investments, diversify.

Diversification will give you more exposure to a wide range of stocks.

Remember, the current market drop can give you a very good opportunity for young and new investors who can play for a long time. All researches highlighted the young people who invested systematically during market corrections and during the market downturns done better than the others who withdrew.

The existing investors should hold their investments tight. Remember, this period when coronavirus is crashing the global markets is just a stress test. Nothing more. Don’t let your emotions lead you, don’t sell your shares in a panic. Sell only if you have some urgent need for cash.

It’s impossible to pick the market bottom. Resist those thoughts. If you want to trade the stocks you can learn more in the “Two Fold Formula” book. Also, you can check it with our preferred trading platform.

Bottom line

Coronavirus is crashing the global markets, that’s the reaction of the market to the spreading of a pandemic. From some point of view, it was expected. A virus outbreak can cause many problems. From day-to-day individual activity to global productivity. This new COVID-19 virus changes the economic outputs since it is progressing in almost every part of the globe.

The investors are reasonably worried. The broad disruption to global trade could have a large influence on global growth. Along with these fears in the financial markets, the fears for individual safety is due to the threat of the virus itself. This level of fear may cause even the most rational investors to play by emotions. As negative news appeared the investors with lower risk tolerance started to sell in panic. And as it was expected, they caused a market correction. Just keep in mind, the market corrections are normal even in a bull market. The market needs to neutralize bad behavior. For example, FOMO. But the market will move forward despite anything. The markets will bounce back again. Also, it will be more sustainable. It just needs some time to catch a breath.

31st March 2020

The Bear Market Starts – How To Avoid Big Losses?

We are not clairvoyants so we cannot predict how long this bear market will last, but what we can do is to suggest to you how to overcome this market condition.

The bear market starts. Dow Jones closed down over 20% on March 11 compared to its highs in February. That is the end of its historic bull market run. The bear market starts. Actually, it started at the moment as the pandemic was declared by the WHO. What to do with your investments right now? Will the stock market crash?

No one knows for sure what will happen next. But it is quite possible that the coronavirus could put stocks down for a long time. What makes us afraid is that the bear markets can go along with the recession.

Investors are panicked. Past several weeks the stock market was switching so fast and unpredictable. Michael Macke, founder of Petros Advisory Services told CNBC Make IT about investors’ feelings: “like we are all Chicken Little.” His comment was relating to the tale about the chicken who was claiming the sky was falling, but the chicken was wrong, right or wrong? “Only after the fact will we know for sure if we have a bear market or even a recession,” said Macke.

Nothing can last forever, even bad or good. The good times must come to the end at some point. This is particularly true for the stock market. And this bullish period did it. So, the bear market starts.
After a fairly exciting run, the stock market lastly jumped into the bear market territory. Investors are disturbed and panicked.

But what do we know about the bear market?

What to do when the bear market starts

The bear market is a point when stock prices drop at least 20% from a recent high. They will stay down there for a while. But how long will it take for the stock market to recover? What to do? Will the recession come too? What to do with investments? How to avoid losses and is that possible at all? This is a turbulent time. So many questions but several answers.

If we try timing the market we’ll be foolish. So, let’s see what experts have to say. First of all, they say drops like this one is a good opportunity to buy more stocks, particularly the people investing for retirement. This is important for younger investors who couldn’t buy stocks during the bullish market because the prices were too high, hitting all the time the new highs. If you have some spare money and you don’t need it in the next, for example, five years, put it in investments. But if you think you will need that cash it is smarter to stay away from the stock market. The history of the 200-years old stock market shows that the market will start to rebound as the bad news stops coming and the prices will stop to decline.

What is smart to do during the bear market period?

When the bear market starts, it is smart to check your concrete investment strategy. If you are a young investor it is quite possible you are facing the bear market for the first time in your life. So, this is a great opportunity to check your risk appetite and how much you are able to manage it. You might obtain a valuable lesson.

Even advanced investors do the same. They are reviewing their portfolios to be sure that the investments they are holding are suitable for their investing goals. It is very important to see your investments are in line with the risks you take. Some experts think that pilling off into safer investments is a bad decision. And maybe they are right. History shows that if you successfully handle your stocks during the bear market, it is more possible to profit a great when the market recovers. Yes, this all about long-term investors because investing isn’t about a moment in time, it is a process over time.

What is the best strategy when the bear market starts?

No one likes this. This enemy is dangerous so don’t try to fight back with it. The most important is to stay calm. Okay, you may play dead as you should do when you meet the bear in the woods. Just lay down and pretend you are dead. This was a joke but it works when the bear market starts and everything seem so uncertain.
So, don’t be frightened. Fear is a bad partner now.

Do you know the old saying on Wall Street? “The Dow climbs a wall of worry.” What does it mean? This means the markets will continue to rise despite anything. Nothing can stop that. No matter if we have an economic crisis, terrorism, or other misfortunes. Just keep your emotions under control and far away from investment decisions. Look, today’s catastrophe will be just an unpleasant flash one day. Nothing more. Well, it can last a few years but still.

It is a normal condition

The other important thing. It is normal to have bad years in the stock market. They are coming in the cycles and it isn’t unusual. For long-term investors, this is particularly a favorable situation. They can buy stocks at discount.

Speaking about this bear period, it might be smart investing in, for example, NFLX (Netflix) can be a good choice. Due to the coronavirus outbreak, and pandemic people have to stay at their homes and what are they going to do? Watching TV, of course. That will bring a higher income with more subscribers, consequently, the dividends could be higher and the stock price will rise. But don’t buy Uber’s stock, for instance. You might wonder why. It is quite simple to explain. As more people will stay at home, less income will be for Uber and prices can drop. (Thank you Guy, for these examples.)

Maybe the stocks of the companies that are involved in vaccine development or anything related to this unfortunate situation are not bad decisions. Pharmaceutical, detergent, soaps, antiseptic, hygienic supplies producers, virus testing, and other biotech companies. Think about this.

Diversification can help also

The point is to have a well-diversified portfolio. If you don’t have yet, it is time to add bonds, cash, stocks. The percentage of each will depend on your risk tolerance, goals or are you an investor with a long time horizon or not. A proper allocation strategy will save you from potential negative forces.

Further, invest only the amount you can allow to lose, that will not hurt your budget or the whole capital. For example, don’t take short-term loans and buy stock with that money if you don’t plan to hold them for a long time, e.g. five years or longer.
Keep in mind, when the bear market starts, even trivial corrections, can be remarkably harmful.

But as we said, when the bear market starts that may provide great opportunities if you know where to look for. We pointed to just a few examples above. Maybe you should follow what Warren Buffett did. So, buy the value stocks since their prices are going down.

Bottom line

What to do when a bear market starts?

We can’t predict how long this bear market will last. If you’re considering selling off a group of stocks to lower your losses, just don’t do that. By doing so you’ll end up locked in losses. How can that situation help you? But if you have cash available for investing, this bear market period is a great time to do so. Remember, just don’t invest money you may need in the next five years or more.

Also, don’t get scared as some investors are when a bear market starts. The stock market will recover from this as always it did during history. If you buy stocks now and your plan is to hold for a long time, you will have good chances to end up in profit.

Maybe it is best to use our preferred trading platform virtual trading system and check the two formula pattern.

18th March 2020

How To React To The Stock Market Decline

Dropping stock prices don’t have to be your enemy necessarily. Wealthy investors know how to react to dropping prices and how to find stocks that are good buys.

When such an unpleasant event happens, the most important thing is how to react to the stock market decline. We have had many very dangerous situations in the stock market over the past several decades. Some investors were ruined, some survived and even more, they succeeded to grow their wealth. What did they do differently? How did they make it? Is there any rule about how to react to the stock market decline?

The S&P 500 had the fastest 16% decline ever. We already wrote about the possibility of how coronavirus can affect the stock market badly. And it happened, coronavirus is a catalyst for investors’ fears.

This shakeout in stocks is motivated by the uncertainty caused by the coronavirus outbreak. We can be sure about that. A kind of support for this claim comes for the media, we are constantly under analysts’ opinion-fire and it is so easy to feel bad and frightened. But we have to do something! We have to protect our health in the first place but also we have to protect our capital invested. So, how to react to the stock market decline?

Investors are fearful. Did you remember what the great value investor Benjamin Graham said for stocks?

“In the short run, a market is a voting machine but in the long run, it is a weighing machine.”

What does it mean?

This means that companies can be popular or not and that’s how markets are valuing them and fears can beat the market but in the short run. But in the long run, the market is assessing the substance of the companies, their underlying business performances. What really matters isn’t the media’s fickle opinion in the short run.

That makes up the stock market. Yes, we saw many cases of risks in the market but the stock market has a long history and had so many UPs on its way. So, what do we have to do NOW? How to react to the stock market decline NOW? Should we be fearful? Or maybe greedy?

Millionaires are down on the stock market

Some wealthy people are getting out form the stock market these days. Especially the millionaires. Some surveys reveal that investors’ confidence fell since economic conditions look like they’re worsening. The stock market strength is the factor that most changes their current investment plans. And as we know, the stock market declines.

But there are some different examples of how to react to the stock market decline. While these investors mentioned above are getting out of the market some, also millionaires, see the opportunity.

Smart and reach investors are buying stocks

They are getting in instead. Are they right? How can they see the opportunity in the declining market? Examining this was so exciting.

Let’s say like this, the majority of average investors are not leveraged. That isn’t a disadvantage, we should look at that as a gift. If they have, and they have, available cash and enough to invest, they are putting it to work right now while the prices are cheap. Are they crazy? The others are going into cash. Well, we think they are not crazy, they are completely smart investors.

Okay, here the explanation.

The major asset classes like stocks will grow over time. The advantage of buying now and holding stocks is that the value will rise faster than the value of the cash. What? Yes, the epidemic will stop one day sooner or later (sooner is better for many reasons), and everything will come to its place. The economy will recover and grow, and we will have a better place to live. Much better than we have now or we had before. Okay, if we are wrong, then we will have more important things to be worried about than the stock market is.

Average investors should do the same

As we said, the individual investor should buy now. Historical data shows that the global stock markets have an upward trajectory and the investments are going to grow over time. So, this theory is simple to understand. That is the philosophy of the richest investors. For example, Carl Icahn and many others. They are buying while markets sell-off on panic and uncertainty. Is that a recipe? It looks like that. This is an example of how to react to the stock market decline. The circumstances in the stock market like we have now are a great opportunity to buy stocks of high-quality companies since there are no fundamental reasons behind the market decline. Even if your stocks are going down, don’t panic! Don’t sell! Buy them more at a cheaper price. In this way, you will grow your wealth.

How to react to the stock market decline

Follow the example of the great Warren Buffett. What he did, how he reacted to the stock market decline?

He advised, “being greedy when others are fearful.”

This kind of view while the market decline is a powerful advantage and the best investors have it. That is different, in contrast to what the majority of investors are doing. That’s why they are unique and rich. So, that attitude works. The point is to pick stocks that can outperform the market. Such stocks even when they have a double decrease, usually turn out and become winners. To make this clear, the stocks that have had bigger declines, had bigger final outperformance after they started to add their positions. That’s the fact according to a recent Harvard study. This study also reveals that wealthy investors choose stocks that exceed the wider market historically and they outperform by double figures. So, follow what really rich investors are doing and do the same.

Pay attention to how to react to the stock market decline

When the stock market is down your stocks will drop, for sure. Some of your stocks will drop more, some less. But let’s assume you were a smart stock picker and you hold a stake in a stable company. But due to the market downturn, its stock dropped 30%. It was a good, steady company. What happens? This stock was one of the winners in your portfolio. Well, it happens due to the coronavirus outbreak now. The stock is down and the stock price decreased by 30%, let’s say. How much did you lose? Should you get out? If you don’t, how long and how much will it take to get back? If your stock decreased by 30% it will need to increase 60% to get back, to break even. This is just an example, remember that. So, since your investment isn’t problematic and you hold a stake in a good company, you can be pretty sure that it will recover after the market starts to rise again. Further, if you sell when the company is down, it is more likely you will miss out on a lot of money. Instead, find the sellers of that stock and buy more at a cheaper price. Just act as wealthy investors do.

Bottom line

However, the stock market decline is stressful not only for the stockholders. The overall economy suffers. But instead of panic, try to use advantages. For example, you can reinvest your dividends and buy more stocks and double your holdings. Of course, the cash you have you can use to buy more stocks in some other company. This is a great opportunity, with less money you can buy more stocks at a cheaper price.

If you need cash right now, you might have to sell your stock at great losses. But this can be a problem only if you invested all your money. If you put some of your money aside and saved it for rainy days, you are safe and can avoid this scenario. All you have to do is to follow what the best investors are doing. That’s how to react to the stock market decline.

6th March 2020

Markets Are Down – Should We Invest Further

The spread of the coronavirus has disturbed investors. The fears of new outbreaks can push down global demand. The S&P 500 closed down 3% on Tuesday, the index is deeper in the red.

Markets are down, an inverted yield curve is noticed, coronavirus is progressing and spreading all over the world. Everything tells us that we should be afraid. This inverted yield curve is proof of investors’ fears. They are starting to fear the worst and sell in panic. Almost all benchmark indexes are decreasing. While we have several things that can help- us to avoid infection by COVID-19, what can we do to protect our investments?

Stock markets suffered two big drops so far this week. Coronavirus outbreak made a great influence on the global stock markets. An economic downturn has increased quickly following China. It is the reality now in the US, Middle East, and Europe.

The best sign of how this situation is difficult is visible among the investors who are looking for safe havens for their capital. But there are so many signs that worry us. The yields on U.S. government bonds are dropping to near-record lows and showing red flags. Further, returns are higher for short-term debt in comparison to the 10-years bonds meaning, yields continue inverted. Everything is opposite to the regular situation and some of the experts think that is the sign the recession is coming.

But our intention is not to cry over this situation. We would like to discuss how to turn this market downturn to our benefit. Is it possible at all? We are receiving controversial information from our governments, experts have their interests also. That makes confusion among investors especially when it is so obvious that stock markets are down. As we said, let’s try to find the way out there. The mother of all questions is:

Should we invest when the markets are down?

In short, yes. Why shouldn’t we? We should invest in any case no matter if the stock markets are down, sideways, or they are up. The essence of investing is to reach settled financial goals. To do that we have to keep our eyes on our investments, to the stock prices, no matter what kind of market condition is. That’s a general duty while investing. Otherwise, everything will go apart.

Let’s say you are going to shop and you notice that something you planned to buy is on discount. What will you do? Step away? Will you buy it or not? Of course, you will. When it comes to stocks, why would your decision be different? As far as we remember, investors’ mantra is “buy low, sell high”, right? Actually, when everyone is selling, the smart decision is to buy. That is according to Warren Buffett. But where is the catch? Don’t buy if you didn’t plan that or just because you saw someone is doing so. Buy only after you made a consistent plan of your investment. Buying cheap stocks just because they are on sale can be the wrong move.

Buy, buy, buy

We don’t want to diminish the influence of the coronavirus outbreak. It is a horrible situation, a possible dead-ending disease, very dangerous. But what we know is the financial markets have been almost immune to the influences of earlier epidemics.

Stock prices are affected by various outside factors and some of them have nothing to do with companies’ operations, that’s true. The prices will decline on the bad news such as the coronavirus outbreak or a downturn in the overall economy. But that has nothing to do with the company, to repeat. The circumstances like this one actually represent a great opportunity. For example, you were looking at some company for a long time and its stock was too pricey for you. Due to the markets down it becomes cheaper. Maybe you have enough capital to buy it since it is such a good market player.

We have a great reason to change our position and buy more stocks

Why not? It is a good time to buy more at fire-sale prices. But what if you don’t have suitable cash to deploy? Think! Maybe you can find one or a few investments in your portfolio to sell and buy a new one.

Always keep in mind, your investment decisions should be based on your financial goals, not managed by market movements. That’s why you should buy stocks when markets are down only if you wanted particular stock and it is suitable for your goals. Don’t rush with that because buying stocks just because they are cheaper at this very moment is also an emotional reaction as much as selling when the markets are down.

What are we doing instead?

Well, we are doing smart trading. We must have a plan, investing schedule and stick with it. That means we already planned some cash reserve and we are ready for a situation like this new market downturn is. So, we are able to look at this like a buying opportunity that comes.

Buying stocks while everybody is selling isn’t a strategy without risk. There is always a chance that the market doesn’t go to the bottom. But if we buy when the markets are down, we have a chance to have larger gains when the market rebounds. More than the investors who didn’t buy.

A few days of bad news are not a reason to sell in panic

To be honest, drastic drops can be upsetting to look at. The markets trended upward for so long and suddenly we have this. But we have to consider this situation as a buying opportunity.
The worst strategy when the markets are down is to sell your portfolio. Okay, maybe the worst of the worst is to take the short positions. The stock market knows how to punish investors who are too bearish.
Rather, maintain a notable piece of your portfolio in stocks, even now when the stock markets are down. The point here is to be in position and take advantage when the markets turn forward. Of course, you would like to protect your portfolio against dangerous market forces as much as possible.

So what and how to do it?

Well, you have to reduce your stock exposure but you have to keep the main strengths. Keep the winners. You can sell the positions that are not performing well because they represent the weak part of your portfolio. So, during the market correction or situations like this one when the markets are down, those stocks or funds might get the most critical hit. Further, even when the markets are down you may have some positions that are extremely good but you assume that they will not play so well. Your actions should be – take a profit. Yes, why not? Just do it at market peaks to have profits.

Further, consider the way you invest, maybe it’s time to change something. Maybe index-based ETFs are not the best choice, they work well during bull markets, but bear markets are less safe.

Don’t follow the prevailing sentiment and sell investments. Rather sell risky positions, for example, some with a high beta. Also, think about selling some with a history of volatility. Yes, we know there are some investors who sell their positions in the most steady companies to avoid losses. What we can say is that they are very nervous. Who else wants to sell everything and sit at the sideline? You know, the market will bounce back one day. But if you sell everything you hold now you will miss big gains when it happens. Sell risky investments only, as we said. Hold blue-chip companies!

Bottom line

The keyword for overcoming the market’s downturn is advance preparation. There is no better strategy. The nature of the stock market is to experience declines from time to time. Preparations mean having enough cash to provide ourselves more opportunities in investing. Think about this downturn as a normal cycle. As said, it is so normal for the stock market to go down after it reached its peak. Savvy investors made some other preparations while the market was at the peak. They already lowered their exposure on time.

But it isn’t too late yet. At least once in life, every single investor has to deal with weak market conditions. So, we truly believe you are prepared for this one. Stay calm, lower your exposure to stocks, sell stocks that are not good players, buy more. But never try to stay at the market with knee-jerks reactions. Don’t sell in panic, that will ruin your investments, your capital, family and finally you. Stay stick with your investment goals and wait for the market to rebound. It is the only proper way to overcome the market’s downturns.

26th February 2020

Expect More Volatility In the Stock Market This Year

This year could be a volatile period for investors given the fact that a global financial crisis could be in the offering in the next several years

Last year showed the best look and we are not here to destroy the joy. Yes, we all can expect more volatility in the stock market this year. But don’t be afraid. The volatility in the stock market can be a stimulus. How is that? If you expect more volatility in the stock market that is the sign you understand the market’s behavior. The volatility of the stock market is normal and part of investing. When the market shows the volatility means the market is operating logically. You are not sure? Let’s say this way. The volatility runs both ways. It gives kicks to the downside and successes to the upside over the short-term periods. When volatility occurs, experts advise it is best to stay calm and let the volatility proceed its way. But you have to prepare your investments for that. Even more, you have to learn how to profit from stock market volatility.

Why do we think we can expect more volatility in the stock market in 2020?

We can’t neglect history, for example.

Look at the S&P 500 over the last 38 years. You can see that the market corrections were so frequent that they became the norm. The average yearly correction is -13,9% over the last 30 years. The historical data shows that there were only a few years when the Index didn’t drop at least -5% for one year. Actually, it happened the Index had a decline of 5% only two times, 1995 and 2017. Last year, it was -7%, it was below average for market volatility.

The second reason to expect more volatility in the stock market this year is that high volatility always comes after low volatility. If you look closer to the S&P 500 Index, you will not see any move more than 1% in any direction during any single trading day since October last year.

Such a low volatility period wasn’t seen in the last 50 years and it marks the constant move higher. All data shows that these long periods of low volatility are followed by periods of high volatility.

The last time we could notice similar before January 2018 and October 2014, both were followed by sharp corrections.

How to prepare investment for stock market volatility?

When the stock market starts falling, we are all faced with bad news on a daily basis. We may feel anxiety, uncertainty, fears. The downside is that it triggers drastic decisions. Even the most experienced investors may panic. Is panic a strategy? Not at all. You must stay calm when expecting more volatility in the stock market. There are some techniques and strategies to use when volatility appears.

It’s absolutely true that short-term losses can cause anxiety. But the worst decision is to let emotions drive you, it may cost you a lot of your money. So, stay invested, don’t pay attention to daily impacts, stay focused on your long-term goals. Yes, it can be difficult but you may have more choices with that.

The short-term volatility fluctuations can be hard to look at, but it’s essential for long-term investors to continue. Even if you want to pull out of the stock market and think it is the best choice, just think, what if you miss out on a market rebound? Such a great opportunity! The gains while you are on the sideline.

The historical data for the S&P 500 Index shows positive total returns for 24 out of the last 30 years.

How to survive market volatility

Advanced investors know that the best way to survive volatility is to stay with a long-term plan and a well-diversified portfolio. Yet, it is easier to say than to do, we know that. But can you find a better way? Diversification is the essence of investing. Hence, when the markets shift, you might have to rebalance your portfolio. So, market volatility could be a great time to mix your assets. Just don’t be lazy. It is your money in the play. Of course, you have to know your risk tolerance.

Day traders can profit from the stock market volatility

The coming back of volatility is bad news for some, but day traders can profit from market volatility. If you are one of them or want to try your hand just start small, big games are not suitable for volatile conditions. Day traders should limit the size of trade to limit the size of losses. To be honest, if you want to learn how to be a good player in this game, you have to experience the pain. What we want to say is, you have to lose some money to be able to be happy when you make a great gain. Don’t you agree?

Further, never place too many trades per day. You have to think about each trade separately. Too many trades mean the bigger potential for losses and more headaches with empty accounts. Trade only a few stocks per day. This doesn’t mean you are without confidence. Contrary, this means you are a reasonable trader. Modesty isn’t IN today, but with this approach, you may have constant profit for a longer time. Just stick to your strategy and always plan your exits. Moreover, now you have this app to check them even before you open the position.

You know very well the trading is risky, especially if you trade for a living. That’s why you have to develop a strategy, with the possibility to test it now and follow it.

What long-term investors have to do while the market is volatile

A normal reaction to market volatility is to reduce any exposure to stocks. Will it make any sense? Long term investors must stay calm when stock market volatility comes. Don’t make radical changes to the portfolio. It can be harmful to your wealth. Meaning, don’t invest more in stocks because the exposure to more stocks could be risky for your investments as a whole.

You have worked hard to build your portfolio. Just stick with your plan and stay calm. Market volatility is usually a temporary event. Don’t panic.

Bottom line

Expect more volatility in the stock market this year but, to repeat, volatility is completely natural and expected. The S&P 500 could experience a correction this year in the –10% to –15% range. That is the average correction. Stay focusing on economic indicators and be patient if you are a long-term investor. If you are a day trader just trade a few stocks daily. Until the volatility goes. Eventually, it will, sooner or later.

9th February 2020

Tesla Bubble is Bringing New Short-Sellers

Tesla stock rose an incredible 17% on Tuesday, but Morgan Stanley recommended selling Tesla for the first time since 2012.

UPDATE 07/02/20:

Yesterday 47 million shares of $TSLA traded at an average price of $750/share – equating to a nominal value of $35 billion. The last price was $748.96 on February 7.

Tesla bubble is turning heavy bulls into short-sellers.
The short-seller Andrew Left’s Citron Research tweeted: “even Elon would short the stock here if he was a fund manager.”

Tesla’s (NASDAQ:TSLA) rally has seen the stock double in 2020 alone. The company’s market cap is over $160 billion. Great news to CEO Elon Musk and his bonus.

The surge is getting headlines but what caused this change? Actually nothing. Tesla’s revenue growth dropped in the last quarter. The traders recognized it as a Tesla bubble and it isn’t surprising that a lot of them want to short it.

One is Citron Research as we mentioned.

In a tweet posted on Tuesday, Citron Research said that they were shorting the stock again. Citron changed its mind after the recent run, despite their earlier statement that they would never do it again.

On Thursday, even Morgan Stanley recommended selling Tesla for the first time since 2012. The bank downgraded Tesla to “underweight” from “equal-weight.” This new rating came at the time of a record rally for Tesla. Morgan Stanley also recognized rising downside risks. Shares of this electric-vehicle maker dropped 4% in early trading Thursday. It looks that traders who bet against Tesla’s victory are the ones who have to push the share price higher. What an irony!

Tesla bubble causes fears. How is that? Can you recall bitcoin’s surge back in 2017? Exactly.

The climbing for shares of Tesla provokes some investors to compare this jump to the bitcoin bubble. Tesla’s shares have grown 36% to a record price of around $887 in the last two sessions. This Silicon Valley favorite has jumped 180% during the last three months. Just to give you the right perspective, on June 3 Tesla’s traded low at $178.97, on February 4, Tesla’s shares have gained almost 395%.

And now Andrew Left said he’s betting Tesla will go back down. For the market winner 2020? Also, Michael Novogratz compared the surge in Tesla to bitcoin’s likewise parabolic progress.

The gains have come too greatly, too wild

The parabolic rally put shares up 21% Tuesday, after a 19% increase Monday. That put gains at over 100% for the past 12 months. Bulls are clapping the record run, but short-sellers are also measuring in on what’s next for the electric car-maker.

But Citron Research doesn’t think the company is bankrupt, Andrew Left said Citron is shorting Tesla only because of the valuation.
Citron Research tweeted more: “when the computers start driving the market, we believe even Elon would short the stock here if he was a fund manager. This is no longer about the technology, it has become the new Wall St casino.”

Morgan Stanley downgraded shares of Tesla to “underweight”

Now it is the “sell” rating. Tesla gets this rating from Morgan Stanley for the first time after seven years. According to Bloomberg, in September 2012 Morgan Stanley gave a selling rating to Tesla. This one came after a record rally and amid optimism about Tesla’s China factory. The bank saw the problem in “sentiment around the stock” that is “admittedly very strong, but we ultimately question the sustainability of the momentum.”

Morgan Stanley also lowered the valuation for the company’s mobility unit and increased the expectations for the core auto business. That resulted in a higher target price.

Why Tesla Bubble?

Tesla’s current valuation is more downside risk for the stock than upside. Even the company’s increased price target from $250 to $360 indicates a 30% downside from the last trade price on Wednesday.

Also, the optimism around the China factory had a great influence on Tesla’s stock. The problem is that the risks are not entirely recognized.

Adam Jonas of Morgan Stanley in his Thursday note wrote that investors “continue to harbor concerns whether an auto business commercializing advanced, dual-purpose technology in economically sensitive industries could be a long-term winner in the Chinese market.”

Tesla has entered into the bubble-zone, everyone is following what’s going on with it, even the people who are out of the stock market are reading news about Tesla’s stock price. And cheering. The surge was too fast, too far. That’s why it looks like a bubble. Who is surprised by short-sellers’ appearance now?

What is a bubble?

A bubble is when the fast rise of asset prices is followed by a shortening. It is generated by a surge in asset prices and driven by an enthusiastic market reaction. When fewer and fewer investors want to buy at a high price, a massive sell-off happens. That causes the bubble to decrease. After the new Morgan Stanley’s gave Tesla shares a “sell” rating it is quite possible the stock price will fall quickly. That is the situation with Tesla stock. The share value grows beyond asset value. So, investors withdraw their money faster in fear that supply will exceed the demand. That could cause the share price to drop.

Tesla’s 2020 rally has been strong. The stock was all the time very high and reached new all-time highs each week. But on Tuesday investors assumed that holes may arise whenTesla fell by over $100 just 15 minutes before the closing bell. This drop was followed by a large volume, implying that it wasn’t quite a healthy correction. Yes, TSLA finished the day up 17%, but the mini-drop was visible. It looks like the air is coming out of the bubble.

Bottom line

Everyone should be skeptical when such a massive run in stock in a short time with very few visible reasons, appears. If we have in mind the recent rise of retail ownerships, we must consider that the further drops for Tesla stock are near.

Citron’s current change on Tesla stock can be accurate as the last one was. As an illustration, according to Bloomberg, Tesla overtook Apple as the most shorted US stock and analysts have bearish ratings on the asset. Everyone is predicting TSLA short squeeze. That can be right but on the other hand, it is more likely this stock price will decline slowly. Increasing short selling is more possible than a sharp fall. One of the analysts, Ihor Dusaniwsky said: “This is due to the amount of short hedging that is being done to offset Tesla convertible bond and options exposure.”

Before Tuesday’s rally, Tesla short-sellers had taken a $2.89 billion loss last year and a loss of $8.31 billion from the beginning of 2020.

Tesla shares were trading 12.73% higher at $879.30 on Tuesday.

By the way, analysts that cover Tesla, predict the average price target is $506, which is around 35% below the closing price on Monday.

But who can predict the market’s movement or what Elon Musks’ next move?

6th February 2020

Category: Market Today

Market Today has one goal – visitors’ benefit

Full in-depth report on competitor companies (peer analysis)

Ever wanted to analyze Consolidated Edison Inc. and didn’t know how? Maybe wanted to learn more about Consolidated Edison Inc. this post will also cover FirstEnergy Corp. and their peers.

This report will use the public and known data for the companies stated in the following list:

Most recent and current stats for each company

Note that current stats does not update.

Important fundamentals stats about the companies

Bottom line: How these companies’ sales and profit preform in comparison to their competitors

Employees stats

Employees are both the most expensive part of the total expenses of a company, and at the same time – its most valuable asset.

Advanced stats

A more in-depth perspective on the companies

According to the data above, our analyst bot has ranked these companies

Ranking companies isn’t an easy task. Much can vary, much can change, no one can predict the future.

Constellation Energy Corp

76

Under Valued

CMS Energy Corporation

113

Valued

PPL Corp

139

Valued

Entergy Corporation

96

Under Valued

PG&E Corporation

81

Under Valued

Ameren Corp

134

Valued

DTE Energy Co

91

Under Valued

FirstEnergy Corp.

103

Under Valued

Edison International

92

Under Valued

Eversource Energy

119

Valued

WEC Energy Group Inc

134

Valued

Consolidated Edison Inc.

106

Under Valued

Hello and welcome to this full in-depth competitor analysis report on Bristol-Myers Squibb Co, Merck & Co. Inc., Eli Lilly And Co, AbbVie Inc, Pfizer Inc.

Full in-depth report on competitor companies (peer analysis)

Ever wanted to analyze Eli Lilly And Co and didn’t know how? Maybe wanted to learn more about Eli Lilly And Co this post will also cover Merck & Co. Inc. and their peers.

This report will use the public and known data for the companies stated in the following list:

Most recent and current stats for each company

Note that current stats does not update.

Important fundamentals stats about the companies

Bottom line: How these companies’ sales and profit preform in comparison to their competitors

Employees stats

Employees are both the most expensive part of the total expenses of a company, and at the same time – its most valuable asset.

Advanced stats

A more in-depth perspective on the companies

According to the data above, our analyst bot has ranked these companies

Ranking companies isn’t an easy task. Much can vary, much can change, no one can predict the future.

Bristol-Myers Squibb Co

90

Under Valued

Merck & Co. Inc.

93

Under Valued

Eli Lilly And Co

155

Valued

AbbVie Inc

106

Under Valued

Pfizer Inc.

85

Under Valued