How Digesting the News Can Give You an Edge

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We are literally digesting news all day long. Almost like food, it has been proven that your eyes see pretty much what they like looking at.

Is that similar to how we interpret the news of the day, only processing what we like to think about? Without going through a battery of behavioral exercises or psychological tests, I will quickly agree and say “Yes, I would most definitely like to process only the news I like thinking about.

But that is not the real world. Not all the news we are exposed to is only about the things we like.  

Let's move this along to your thought processes when you have to digest the massive amounts of financial information available to you. How does the way you process information help you make a sound investment decision? How do you know where to focus your attention?

Last month, I was involved in a research project where I identified 12 stocks that I believed would show gains within a reasonable time frame of 45 days. Of the twelve stocks I picked, 11 of them were winners. My greatest gain was $83 per share in Samsung. And my smallest gain $0.33 cents from Sirius XM Hldgs. 91% of the stocks I picked were winners and most of those were big winners of at least a $1 increase in share price or more.

Hopefully by sharing some of the methods that I use to digest the daily financial news available, I will be able to help you identify securities that have the potential to show gains.

Let me preface this by saying my method is not foolproof , for example I only got 11 out of 12 right but any old timer in the securities game will tell you, "You only need to be right 51% of the time to be a winner." So with a 91% average going in my favor some aspects of my methodology may be helpful.

I always look for deals that involve ridiculous, extremely enormous amounts of money -  amounts you can't even visualize in your mind's eye. Venture capital is indeed lucrative, but when news hits the mainstream news wires about a transaction that will involve $50 billion dollars, I feel very confident that those business entities involved will do whatever it takes to see that amount of money bring them a return of an equal amount or more.

I do like to bet on good news! Not because Sony's quarterly earnings are up a few cents, but more because it is good news that points towards a new trend of consumerism.

One thing that interests me now are the SnapBots from Snapchat. SnapBots are vending machines that dispense video shades that get quickly bought, and then are marked up and sold into the secondary market  immediately after most sales. And the parent company, Snap is close to bringing an IPO.

The euphoria surrounding the product and the evidence of the demand for what they are selling for is worthy of my attention. It is sometimes difficult for 'average Joe investor' to get involved initially in these deals. Sometimes you need a special invitation to these parties. For those of us who are still on the journey toward more gains and profits, the opportunity to be involved at a later date and invest in the trend does exist. This company and others like it with good news regarding extremely positive product sales  are definitely worth monitoring. Sometimes my own desire to  possess what they are selling will drive me to monitor the company.

Another thing I look closely at is, who are the players? For example Apple Inc.'s (AAPL) new IPhone 7 had very mixed reviews. It may be considered by many as not being one of their more popular models. But because of the marketing resources that AAPL has along with the explosive issues Samsung (one of AAPL’s greatest competitors) had after releasing their Galaxy Note 7 model (which was banned on airplanes and subsequently recalled), AAPL was able to make strong sales of their new product, and the stock price has risen substantially.

I've never been a  big gambler on bad news. For me, I just don't like to think about things that stay on the minus side of an equation, even though bad news is something that presents itself daily. When analyzing bad news I do my best to discern who will be the beneficiary of that bad news. When the Korean logistics firm, Hanjin, nearly went bankrupt,  Federal Express And United Parcel Service were ready to fill that void and the stock price of both companies benefitted their investors.

These are some of the basic tools I use to digest the daily news we are bombarded with in regard to stocks and their movements. They have been very helpful for me and hopefully they will help you pick winners as well.