Modern Investing Techniques — Episode 24

Thanks for tuning in to Modern Investing Techniques, episode twenty four, for April twenty one, twenty twenty six. I'm Patrick, coming to you from Vancouver. Let's look at what the markets are telling us today and find some opportunities. Quick reminder, everything we discuss here is for education and entertainment. The Practice Investment of the Day uses simulated trades with no real money. I'm not a licensed financial advisor and this is not financial advice. Always do your own research before putting real money to work. J.P. Morgan lifts S and P five hundred target to seven thousand six hundred on A I earnings strength and potential Iran ceasefire. This morning the markets traded mixed amid ongoing developments in the Iran conflict. The S and P five hundred closed at seven thousand one hundred nine, down zero point two percent. The NASDAQ Composite closed at twenty four thousand four hundred four, down zero point three percent. The T S X Composite closed flat at thirty four thousand three hundred sixty. Our simulated portfolio stands at year to date minus zero point three eight percent versus the NASDAQ Composite year to date plus five point zero three percent, delivering year to date alpha of minus five point four one percent. About fourteen days ago we picked S S N L F on an earnings surprise momentum play on A I memory chip demand that closed flat. This is a reminder that even clear catalysts can fail to generate alpha when already priced in. Investors should monitor retailer guidance and European sentiment readings for shifts in consumer spending trajectories. With markets refusing to crack despite geopolitical tension, let us look at a disciplined framework for staying invested when headlines scream both fear and euphoria. Market resiliency strategies focus on maintaining core allocations during periods of short term euphoria or fear. Markets historically recover from geopolitical shocks and sentiment extremes rather than collapsing indefinitely. This approach treats apparent sugar highs from positive developments like potential ceasefires not as reasons to chase momentum. Instead they become signals to rebalance toward high quality names with durable competitive advantages. In today's environment of mixed retailer outlooks and elevated macro uncertainty the strategy keeps investors from overreacting to headlines. It does so by anchoring decisions to weekly moving average trends and free cash flow yields instead of daily price swings. Implementation is straightforward on platforms like Questrade or Wealthsimple. Scan for companies whose two hundred day moving average has held as support through recent volatility. Then deploy capital in five to ten percent increments within T F S A or R R S P accounts to avoid superficial loss rules. The approach has historically performed best following geopolitical spikes or rapid sentiment shifts. It delivers outperformance by avoiding whipsaw trades. Primary risks include prolonged drawdowns if resiliency assumptions prove incorrect. There is also opportunity cost if markets continue climbing without pause. Staying resilient is one thing, but knowing exactly how options can both protect and enhance those resilient positions is another. Now let us put some of these concepts into immediate practice with today's Flash Trade. This is a simulated trade for educational purposes only. No real money is involved and this is not financial advice. Today's Flash Trade is on N E S T L E I N D, Nestle India in the consumer sector on the N S E. The strategy is earnings surprise continuation after strong quarterly profit growth. Shares climbed five point five percent on the news, signaling positive market reception to fundamentals. The technical setup shows post earnings price action holding above key daily moving averages on elevated volume versus the twenty day average. Our risk assessment notes that escalation in regional conflicts could disrupt supply chains or demand. We set the stop loss four percent below entry to cap maximum acceptable loss. The target is plus one percent to plus three percent. Confidence is medium because the strong fundamental catalyst and positive price reaction are aligned. But broader European and Middle East sentiment uncertainty prevents high conviction. This demonstrates how to isolate company specific earnings strength from macro noise for short term opportunistic execution. Listeners should practice scanning earnings reactions in non tech sectors to build discipline distinguishing signal from broader market moves. Before we get too excited about today's flash idea, let us review what happened yesterday. Yesterday's trade was C L D X on an analyst upgrade plus positive phase three data. We entered at thirty five dollars and seventy nine cents at market open. The position closed at thirty four dollars and thirty eight cents at market close. That produced a loss of three point nine four percent, equal to minus thirty nine dollars and forty cents on a one thousand dollar simulated position. The trade lost three point nine four percent while the NASDAQ fell approximately zero point three percent over the same window. This created negative alpha of minus three point six four percent. Positive clinical news failed to overcome same day selling pressure. Even with strong trial data the position closed lower. Rule, always verify real time volume confirmation on healthcare catalyst days before holding through the close. The tools below can help you get that real time volume and management tone data before you commit capital. Consider the Finviz Technical Screener. This free platform delivers real time charts, fundamental overlays, and technical scans including R S I, M A C D, moving averages, and volume filters. It helps identify support or resistance levels across T S X, N Y S E, and NASDAQ names. Individual investors gain an edge by running custom screens for oversold conditions or breakout setups that used to require expensive Bloomberg terminals. Canadian users can filter for C A D denominated stocks suitable for T F S A portfolios and set alerts for moving average crosses. Next, look at the Investing dot com Earnings Transcript Tool. The site publishes full earnings call transcripts within hours of release. This enables investors to search executive commentary for forward guidance, margin trends, and competitive mentions that headlines often omit. It provides a measurable edge in assessing whether an earnings beat is sustainable or likely to fade. It is particularly useful during volatile periods for cross referencing management tone against price action on platforms like Interactive Brokers. Here are four quick market signals worth your attention. Global supply pressures are raising input costs for Canadian grain growers due to fertilizer price hikes. This could squeeze margins for P E I farmers and ultimately flow through to higher consumer food prices. Consider reducing position size in Canadian agriculture exposed stocks within R R S P accounts this quarter. Associated British Foods reported an eighteen percent decline in operating profit. They flagged potential consumer spending weakness tied to the Middle East conflict as one of the first major European retailers to do so. It may be time to trim exposure to European consumer discretionary stocks in diversified portfolios. Large options gains have triggered substantial ordinary income taxes plus future I R M A A surcharges on Medicare premiums. In that situation a three hundred thousand dollar options gain created a large tax bill. Consult a tax advisor to utilize T F S A for future options strategies where possible to minimize taxable events. Crest Nicholson slashed earnings guidance citing elevated economic uncertainty from the Iran war. This triggered the largest single day share drop in company history. Avoid adding exposure to homebuilder or cyclical industrials until the geopolitical premium decays. Taking a look at our overall simulated portfolio performance. We have completed eleven total trades. The win rate stands at twenty seven percent with three wins, four losses, and four break evens. The cumulative profit and loss is minus forty one dollars and fifty six cents. The average return per trade is minus zero point three eight percent. Our A I analysis is learning from these patterns and adjusting its approach to catalyst evaluation. Now here is something that most retail investors get wrong about options and it cost me money before I figured it out. Imagine you bought protective puts on a broad market E T F last week when the S and P five hundred sat near seven thousand one hundred amid rising Iran tensions. Your seven hundred ten strike put filled for a twelve dollar premium on a seven hundred dollar underlying. Yet the position lost fifty five percent of its value in seven days even as the E T F fell two point eight percent. Options consist of intrinsic value, for a put that is the amount by which strike exceeds spot price, and time value. Theta represents daily decay that typically accelerates from zero point zero five to zero point two five per day in the final two weeks before expiration. A covered call involves owning one hundred shares of the underlying and selling an out of the money call. Collecting for example three dollars and fifty cents premium on a one hundred dollar stock boosts annualized income by roughly three point five percent if the call expires worthless. Greeks such as delta, approximately zero point four zero to zero point six zero for at the money options, indicate forty to sixty percent chance of finishing in the money. Theta helps quantify sensitivity to price and time. The pro tip most retail investors miss is always calculating breakeven, strike plus net premium for calls or strike minus net premium for puts, before entry. Professionals cross reference implied volatility rank against the past thirty day realized move. Never risk more than two to three percent of portfolio on any single options position. The biggest mistake with options is using naked positions that expose portfolios to theoretically unlimited risk on the short side. Instead always begin with defined risk structures like covered calls for income or cash secured puts for entry. Before we wrap, keep an eye on upcoming retailer guidance for further signals on consumer spending shifts. That wraps up today's Modern Investing Techniques. Remember, every trade is a learning opportunity, win or lose. Subscribe, share with a friend who wants to invest smarter, and we'll see you tomorrow. This podcast is curated by Patrick but generated using AI voice synthesis of my voice using ElevenLabs. The primary reason to do this is I unfortunately don't have the time to be consistent with generating all the content and wanted to focus on creating consistent and regular episodes for all the themes that I enjoy and I hope others do as well.