hi guys today we're seeing quarter three earning reports coming out and
announcing one by one so some of the stocks were outperforming the
expectation and some of the stocks are underperforming the expectations so what
are the expectation who make those okay some of the iBanks some that institution
some of the TV some of the media for the same stock and on the same day some say
outperforming some say is underperforming the expectation
so as an amateur I'm really scratching my head I don't understand which one to
follow and I do not have a measurement and I do not have a ruler myself so I
have to follow and in the end I always follow the wrong one why because we do
not know the formula we do not know the valuation, first of all, we talk about the
valuation so today we announce the formula so that you can yourself you can
also, calculate the valuation yourself first of all
we'll just talk about what it's valuation we have to understand
valuation is different than the price sometimes if we missed buying a stock
let's say I miss it from $10 and is right now $20 then we will say this
stock is now really expensive the fact is after last year many of the stock had
almost double if not triple of the price so if every single time the stock
is only 50% of double it and then we think that is expensive to sell it just
like housing market whenever you sell it you can most likely I think you cannot
take into the housing market again so that is the misconception between the
price and valuation they're two different things so today this formula
is in order for you the stock price to stay at this level then your trading
today you have to show me the report to support that if you're underperforming
this measurement then the price will eventually goes down so that is
something that we'll talk about now so first of all, if you haven't subscribed to
my channel please subscribe to my Youtube channel and like my Facebook
page and this requires a little bit of math which probably you'll be unfamiliar
with for the past 10 or 20 years, I don't know but it's a simple math if you have
any questions please leave me comments in the comment box below that's it so if
you like this video is a bit technical but is not too hard but
if you like it please give me thumbs up and also share this video to your friends so
first of all, let's reveal what we talked about in July because in July we have
used this model already we applied specifically in Nvidia which is the
backbone of Big Data and gaming console stuff like that is really really big
company and at that time people say that oh it's almost doubled and tripled at the
price right now is too expensive right I'd say no because this is not the
answer I said no not that I know that is
undervalued or overvalued I'm saying that no wait until we do the homework ok
so at that time we said Nvidia we talked about the announcement day what we
expect the anticipation and the expectation and in the end is
outperforming our expectation right so right now you see at that time the
historic high it's only 170 dollars ok it's now tested $208
per share okay it's only three months ok so right now technically if
you have followed the analysis and you have been investing it investing not
speculating ok invested in this stock right now technically if it drops below
185 dollars you can cut your profit, okay and it's still, in fact, $10
higher than the historic high when we published the video last time in July okay
so there is something that you have to put in your mind price and valuation are
two different things okay so now let's kick into the topic
so there are few constraints that we understand first of all is the index is
doing poorly, for example, they're earning less then the stock market we're not
doing good and the stocks are not doing good and you should only use it in
quarter three for any sense people are expecting quarter four reports then is
not doing any good okay if the stocks are blue chips it will be more or less
higher correlated with the index with the formula so the fourth one if the
stock is losing money, then the valuation model will not work this is something
that I've been teaching for six years is the special formula I will teach it in
my preliminary class okay so I have two more models such as cash flow models
which every single variation all the patterns
or the technical analysis is unique because my losing money experience is
also unique so after this experience I've developed
many things that will be taught in the class so this is one of them okay so
this is a simplified version of the preliminary class if you have been to my
class just use the formula I announced in the class okay so this is the formula so
whenever you see the left side and the right-hand side okay the left-hand side
is the earning per share that is going to announce quarter to quarter is
quarter three to last quarter three it's not quarter two to quarter three okay so we have to
understand that so people were going to announce the
report in all kinds of ways okay so they will say that oh the new business has
gone up by 500% but that's the new business right oh the revenue has gone
up by 20% that's only revenue you okay so we need
earning per share quarter three to last quarter three okay so that's the left hand
side so the right-hand side is something you have to compare, so the right hand
side in order for you to stay at this price is the p/e ratio today PE
ratio defined it by the constant of 177 that is something that you should use
for only quarter three okay so it's something that you should calculate so this is how
it works so whenever the earning report coming
out on the left-hand side, it's greater than the right-hand side then it is over-
performing expectation so more or less the price will go up okay so if the left-
hand side is lower as less than the right-hand side then the stock price may
go down so it doesn't disturb the stock price so maybe we over thought this
market is overreacted so you have to return what I've given you before
because you do not deserve it okay so it's going back down okay so we will use
MTD which is a really really big company that use all kinds of measurement in
labs in scientific measurements we're holding it really we're literally
holding it in our portfolio MTD so the earning report is announced November 2nd
okay so quarter three to quarter three as you can see in the
screen it's only growing by 15% okay that's the left hand- side so
the right-hand side is the p/e ratio divided by 177 okay so is 38.55/177
and the right-hand side becomes 21.77 so in plain words is
in order for you to deserve several hundred dollars per share then your
report should better give me a quarter threeto quarter three earning per share
growth of 21.77% okay so as you can see is only 15%
growth right so it has a bearish candlestick and then got down is in no
time it's just in two days okay so now the price is around $650
okay so that's basically something you can do as an exercise or
something that I prove you that it works as soon as you're not using this formula
to speculate you really to hold it and to wait for at least one quarter to few
quarters there's something that it should work so MTD you can look at oh
I know the stock devaluation is not as good it's not as attractive right but
technically you see there's a red uptrend line that is supported by four
points okay so right now as soon as is not breaking below $625
per share and then it will probably go up challenging
the $695 per share level again and then if it breaks
historic high again it would test the 738
per share again so in this way is saying that the market has already digested the
bad news that not a bad news but is the underperforming news of the quarter
three earning report and they may be looking forward to quarter four right so if it
is going below 625 is showing that technically the market is still reacting
to this bad news and then technically it would test $570
per share if in that case if you haven't bought
MTD you can try to buy it in 625 level or if it breaks
below that, you can wait until $570 and invest
it again so the second company I've talked about
it in July which is the earning report of quarter two if you have listened
to me Home Depot you have been profiting from
it again so at that time people say that oh Home depot MTD has been going up a
lot right and Nvidia okay so basically again it's not about the price it's not
about everybody not it's about the future okay so right now November 15 so
we can do this homework it's the date of the announcement so the right-hand side
if we copy down the p/e ratio is 23.56 divided by
the denominator of the constant of 177 and the right hand
side becomes 13.31% okay so as soon as the earning
report earning per share quarter three to quarter three is screwing by more than
13.31% and it deserves this price or more okay so
the third one is Cisco is really really a big company it's blue chips and if you
want to invest in it or not you really have to understand because it will
affect the market right so November 16th is a date of the announcement the right-
hand side is 16.49 divided by 177 the right-hand side becomes only
9.32 tell me you will hit this expectation please okay so at that day
you look at if the left- hand side would be greater than that if not it will not deserve
the price of $34 per share right now so it will come back down so right
now technically we can look at that so right now you can see a triple top of
$34.6 okay so if it breaks above probably the only report
is more than 9.32% right so it would hit $38.6 per share
probably okay so if it's not it would go down testing
32.45 per share that's probably the earning report
is not doing well if it's doing really badly maybe it will break below that and
would test even 30.50 so that is basically you have to
merge the valuation with fundamental with technical analysis that is
something that I always use you will never belong to any party you will never limit
yourself to any signal or any analysis any cat can catch mice
is good cat okay so I look forward to your homework so if you have done your
homework please leave me comments in the comment box below so you each other and
myself can also do some homework and we can backtrack and we can double check
your answers if your any questions about math or this formula you can also leave
me comments but not to forget to give me thumbs up and share this video to your friends
investing make easy I'll see you next time goodbye
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