Decoding Wall St.​: Spotting Bear Markets, by Acting Like a GMAT Student

To be perfectly honest, our Editor in Chief Brian Sozzi has stated consistently that it’s difficult to precisely explain how he derives at conclusions on the direction of stock markets and individual stocks. It’s almost as if this young financial services stud is the kid from the new Kiefer Sutherland show “Touch.” Like the kid in the show, your favorite decoder (who is obviously older) just senses and sees things not readily apparent to the untrained eye, or even to the wily Wall Street veteran. Some on the “Street” love to use fancy 80 step computer models, others 80 year old finance textbooks, to select stocks successfully. But, when it comes right down to it to really decode hidden clues found all over the place on Wall Street, sometimes one has to act like a wolf; rely on instincts and training that opened the door to a fresh kill only two days earlier.

Upon stumbling across a story that references the performance of stocks during a certain time period (in this case three years), you have to be prepared for the “but clause.” Stocks are up 100% in three years but have fallen in value in the past two days (sound smart: “trading sessions”). Or, stock prices are down 50% in a year, but may rise (sound smart: “pull themselves off the canvass”) in the next couple of days if XYZ economic or government development unfolds.

If you take an extra second to think about what a business news headline teases, then finding must know terms and concepts becomes easier. Moreover, in doing this exercise it will help you to formulate an opinion on whether stocks may go up or down, and that is great to have in the mental arsenal to be uncorked at a meeting with a financial advisor or in a cocktail party discussion.

Inside the Editor’s Head

See what the Editor sees as he reads the decoded business story of the day (headline available upon request). You could play along by cutting and pasting the title into Google, which will bring up the story.

Thought #1

Big-time investors (sound smart: the “smart money crowd”) are trying to justify more stock market gains by suggesting stock prices up 100% in three years is only a drop in the bucket. Unknown to the little guys, or average investor, this smart money crowd may be selling their stocks at high prices while “talking their book” to nervous average investors (through TV appearances or comments to the media). These investors who listen to the advice of the sharp dressed, and sharp sounding, end up buying the stocks the smart money crowd is dumping at high prices because they have unparalleled access to information.

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Based on the book co-authored by former CNBC anchor Nicole Lapin and Wall Street analyst Brian Sozzi, Decoding Wall St., the daily Decoding Wall St. newsletter is a lifeline to unlocking, and acting upon, an endless array of hidden financial and world news clues. On FaceBook and Twitter, Decoding Wall St. releases unique streaming content daily, as a compliment to the newsletter, to help get you through interviews right on down to after work cocktail parties.  For more information, including to join the movement, please visit www.decodingwallst.com.