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Trading Strategies Adopted From NFL QB Peyton Manning & Coca-Cola

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Peyton Manning is by far the best fantasy player in the NFL right now. Watching Peyton dissect opposing NFL defenses is a thing of beauty. 
But what on earth does Peyton Manning having anything to do with the world of stocks and bonds you might ask? 
The answer my friends is very simple, do what Peyton Manning does, he takes what the defense gives him.

Today's installment from the series, 'Trading Lessons From A Hedge Fund Trader' will focus on Coca-Cola (NYSE: KO) as per our reader's request for research, available here on BehindWallStreet.com. 

It's football season and I am a huge sports fan. Today's trading lesson will be very entertaining if you are a sports fan or if your name is Dr. Stephen Lee. We will be analyzing Peyton Manning's game, Coca-Cola (NYSE: KO) and by the end of this article you will learn how to apply Peyton Manning's methodology to your very own portfolio. 

NFL football analysis

Peyton Manning is hands down the single most powerful force in NFL fantasy leagues today. If you have him as your starting QB, you are pretty much invincible. You know it, I know it, we all know it and we all hate you for having Peyton Manning. 

The NFL is a passing league and those smart enough to realize that took Peyton Manning before Ray Rice, C.J. Spiller and Arian Foster.

My buddy, Dr. Stephen Lee (Anesthesia) AKA Cheesemonkeys, decided to unfairly unleash Peyton Manning's inhuman fantasy point producing ability (AKA cheating). 

Look at the point totals below.


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Have you ever lost a fantasy week when you had 168.54 points? 
Do you know why I lost, 2 words, Peyton Manning. 

Did I lose because of Dr. Stephen Lee's coaching genius? 

Maybe, he is a pretty smart guy (he's a Dr so I'm assuming he's smart but you never know) but If you ever watch Dr. Stephen Lee play chess (I'm his chess coach by the way) then you'll realize that Dr. Stephen Lee is not a strategy genius. He has Peyton Manning! I sense a little sour grapes.

Shots fired (maybe it's just the bitter taste of losing to your buddy when you have 168.54 POINTS FOR THE WEEK!).

Let's breakdown Peyton Manning's game.

He passes when you stack the box (your pre-snap defensive scheme is showing that you want to stop the run).

He runs the ball when you don't load the box (your pre-snap defensive scheme is showing that you want to stop the pass).

In other words, he simply takes what the defense is giving him.

In trading and investing terms, Peyton Manning has a methodology to determine if the run or pass has the greatest probability of succeeding (executing his intended play). He doesn't care if he runs or throws the ball, he only wants to run the play that has the best chance of succeeding.


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This is an 8 year chart of Coca-Cola (NYSE: KO).

So what does this chart tell you? It shows you that the market goes up, down and sideways. Sure the market usually goes up over time but you want buy when the market is going up and sell when the market is going down.

They've done studies you know, 60 percent of time, it works every time.

What would Peyton Manning do if he saw this chart? 

He would realize that he should go Long (buy stocks) when the market was strong (the chart will show the price action, the squiggly lines going up).

He would go Short (Sell stocks short) when the market was weak (the chart will show the price action, the squiggly lines going down). 

If you are the average investor and only go long stocks (Buy only) then you aren't operating as efficiently as Peyton Manning. Come to our education and insiders page to learn how to potentially make money when the market goes up or down.

If you got burnt by the stock market crash of 2008/9 that's because you went long stock in a declining market. The most important thing to realize is that markets go up and down and your job is to move in sync with the markets. 

Be like Water.


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Here's the 1 year chart for Coca-Cola (NYSE: KO). Study the chart and tell me what Peyton Manning would do? 
Don't move until you see it

Fundamentally, Coca-Cola (NYSE: KO) is a rock solid company with global brand name recognition. What do you need when you eat Pizza, a burger or Chinese food? Yes, the answer is Coke. 

You need Coke and those who drink Coke don't accept the substitutes. Coke is truly a drug. 

Coca-Cola (NYSE: KO) is not a company you short, Coke is like Dion Sanders, when he covers your best player you don't throw in that direction. 

If you want to short Coke then I recommend you look at other companies in that space and short Coke's ugly sister.

Peyton would realize the price of Coca-Cola (NYSE: KO) stopped going up and that the price is in a sideways price action. The price behavior has changed.

What does this mean in football terms? 
The defense is in no man's land, the defense isn't showing him what it wants to do. 

So what does Peyton Manning do? 
"Omaha", "Roll Montana", "Check", "Funky Chicken". 

Peyton will call a lot of fake audibles, fake the snap, extend the snap count until the defense shows what it wants to do. 

Peyton Manning is just buying time. Remember, he wants to run the ball on your pass coverage and he wants to pass the ball on your run package.

In the real world, Peyton Manning would have to run a play before the play clock runs out or call a time out. If Peyton Manning doesn't have a read on your defense then he will try to exploit your worst match up. He will pick on the weakest defender.

But in the markets, Peyton Manning would simply find a bunch of the Strongest stocks and buy them. He would also find the Weakest stocks and sell them Short.

That's what he does with his receivers, tight ends and running backs. He doesn't favor anyone of them. He simply goes with the best matchup. If you have double coverage on his best receiver then he will throw it to the other players who are open.

Conclusion

Peyton Manning is the best player in the NFL because he takes what the defense gives him. 

As a trader or investor, you can learn from his mindset and learn how to trade and invest in the direction of the path of least resistance.

Peyton Manning spends countless hours learning how to read defenses so he can find the best matchups he can exploit.

As a trader or investor, do you spend the time studying how the markets work or do you just  rely on your financial adivsor for stock and fantasy football tips.

Remember, the markets go up and down and your job is to Buy stocks in a rising market, Sell short stocks in a declining market and to stay clear of a sideways market.

Investing, trading, NFL and Coca-Cola (NYSE: KO) analogies, where else does this exists besides BehindWallStreet.com. We aim to educate and to keep it real.

For all of us here at BehindWallStreet.com, I'm Joel Laceda, You Stay Classy San Diego, Peyton Manning, Ron Burgundy and Dr. Stephen Lee.

For information regarding stocks we do like, check out our Flagship Newsletter.

This is a cursory look at Coca-Cola (NYSE: KO)  and we are not making any specific buy or sell recommendation but merely voicing our opinion of the current situation. Each individual investor must conduct their own due diligence of both the company, the market sector as well as their own financial situation and risk parameters.

If you ever find yourself in a prickly situation, take a breath and pause, call a few audibles and do what Peyton Manning does, take what the defense is giving you.

By Joel Laceda - September 30, 2013 BehindWallStreet.com

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets Trading Ideas

 

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