Ep 116: Looking Back at Stocks & The Lessons from 2016

December 29th, 2016

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Hey, this is Sasha Evdakov.

In this post, I wanted to look back at some of the different stocks and the way that they performed in 2016. Also, I wanted to look back at some of the lessons that you could have learned from trading in 2016.

I'll also share with you my biggest takeaway and the thing that I will be working on most within my trading as we approach 2017 and into the future. But I'll share with you some of the big things and concepts that you could have learned from and some key points as you got into trading or investing in 2016.

Disclaimer

Before we move forward remember that everything that I share with you on screen here is simply for educational and informational purposes. The main reason is that you might be watching this sometime in the future. And your risk tolerance might be different than mine. Keep that in mind as we go through this lesson or share some stocks and insights throughout this post.

Quick News & Updates

Live classes and the webinars are posted, and if you're on the newsletter list, we do have some free live courses scheduled for the newsletter subscribers.

Go to the Traders Fly website and hit the live classes right there at the top. Then you scroll down, and you'll see when things will be released.

You can share the stocks that you want me to review or look at as we get into these webinars as well.

The other thing that's new and different is the packages for the video critical charts. Those are the webinars that we were scheduling here throughout as we get into 2017. It is also online and available. Go to the member's page and take a closer look.

One more thing - Accelerate Your Stock Market Education version 2 course is available. Go to the Rise 2 Learn website and find that course.

It's a pretty good solid 8-hour course with a bonus module. It was reworked in more detail and get more specific to broadening and accelerating your education in the stock market world.

Taking a Look at The Charts

Let's take a look at some charts and see some of the takeaways that you could have learned from 2016. Some of these takeaways are going to be different from other people. You might see one chart and get a different takeaway from another person.

That's because we're all at different levels. You're looking at things differently, you all see things differently, and maybe specific lessons apply to you, and other lessons do not apply to you.

It's always important to look at what it is that you could take away to make yourself better for the next year. I'll share with you my insight for me as we get towards the end of the video.

Lesson #1 - Watching Big Political Events

We're looking at the SPX. One of the big takeaways that you should have gotten out of it was the significant events. It's essential to look at how things move during significant events.

We had two of these things — number one you had the Brexit over here at this price level. Then the second thing that you had was the election. Two significant political based events happened in 2016.

That doesn't usually happen that often. I mean there is still politics that occur throughout the world, but they don't happen that quickly and that strongly in one single year.

And especially they don't impact the economics as majorly as these two events did. If we look at Brexit (June 23rd) and you look at the daily you can see how we had a significant milestone and a major pullback in a big way.

Things were rocking sideways for a little bit, and we had a major pullback. And then after a while, he had that snap back after a couple of days overshot to the downside. And the same thing happened here with the Trump election.

You can see things were pulling back and then you had the snapback. Remember the market fools most of the people most of the time.

Right here we had the same effect that happened. And everybody was saying well if Trump gets elected in that case you see a pullback. There's still some concern over the next couple of years. We'll see how things play out because ideas right now are based on euphoria.

All these things are coming into the foreground here soon. Right now it's emotional trading. Especially this trading right there at the top.

Things have to prove themselves. As you get into January with the earnings things, have to prove themselves. It's the same thing with the work. How is the new administration going to handle situations?

In February and March, you'll start to see how those things start to play out. Watching these significant political events, you need to position yourself accordingly. In 2016 we had two of them.

Lesson #2 - Raising Rates

The next major thing that you probably learned was that the Fed is quite scared. They're quite afraid to do things, and many people, in general, are quite scared to do things.

When you look at the Federal Reserve, they're very cautious about raising rates. They talked about raising rates, and they keep pushing it out up until you get a high probability of them raising rates.

And then they finally do it. No matter who you're talking to they're always looking at themselves first. That is the case whether it's the person on the other end who manages your investments or to the Federal Reserve.

They're looking at their job, their family and then potentially the economic side. They have to do the appropriate things based on themselves and their job.

Because they don't want to lose their job, they want to do things accordingly and do them correctly, but they also don't want to disturb the economics behind it.

That goes the same thing with analysts. Let's take Apple for example for conversational purposes. We look at it here weekly.

One analyst is saying this stock is going to 150. Another guy is saying 160. And another guy saying 135 in the next year.

You have all these analysts talking about this, but one guy thinks it's going to sell off in a big way to 80. Well, he's not going to put down 80 because his job is on the line.

What if it doesn't go to 80?

He might do something like 110 and be conservative. But still, try to be in line with everybody else. He doesn't want to be so far out of the box. Even if it does go to 80 you know at least he's in better shape.

But in general, remember they're looking at their job. That's the same thing with the Federal Reserve. They're looking at their job, and they don't want to sway the positions.

That's why looking at analysts is the same thing. You're looking at these numbers and figures. And this is why a lot of times it's skewed to one direction or another. It's a herd mentality, and it's kind of what the market is all about.

Lesson #3 - Dogs Will Be Dogs

When you look at these stocks (GRPN) over 2016, this stock had trouble getting up above that $6 range. It couldn't do it in 2016. It tried, it got back under. It was still hanging out. Stocks that are dogs they'll probably continue to be dogs.

I've talked about that with AMD for many years. This stock has been a dog, and finally, it's starting to break out and see some light. But in general, it's been under that $10 range for almost 6-7 years. And now it's finally breaking out of the $10 range. It's still nowhere near $30-$40 range.

This could be a sympathy play for the Nvidia company which is over accelerated in my opinion. You'll probably see a little pullback here would be healthy to the 96 level. In either case, other things like Twitter right here if you look at it 2016 this stock once it broke under the $21 range.

It struggled to get above it. It did for a short time, and within two weeks it was back under it. Dogs will be dogs.

There is the same thing with GoPro. Some of these stocks never get out of that darkness. They continue to stay cheap simply because they're underwater, there's no fuel, and there's no momentum. Remember that once the stock is a dog, it's going to continue being a dog.

Lesson #4 - Problems With Lost Credibility

The next lesson comes with CMG, and that is because struggles last awhile.

They've had some problems with:

  • their food
  • the credibility behind their food
  • the sicknesses
  • the illnesses
  • operating and running their restaurants

Once this sell-off started to happen within the company, you can see it struggled.

Since 2016 we struggled to get above that 530 level. It tried it once and then it continued to move lower and stayed low. Now we're hitting pretty much 375 on this stock as we close out the year.

The initial sell-off is at the $647 level which was a little before 2016. You can see that this stock is incredibly in trouble and struggling to build back their credibility.

This takes a long time to build when you talk about consumer health and overall consumer positive outlooks. Losing credibility is enormous in the market and once you do that it takes a while to build.

Another one that comes to my mind is Samsung. When you look at Samsung with the phones, there's probably going to be a handful of people that are going to struggle to buy a Samsung phone.

They've had some fire problems and explosions. So these companies that have struggles and challenges it takes a while for that credibility to continue to get back to where it was.

Lesson #5 - Things Are Shifting

The next lesson comes from different sectors. Looking at things like a Bank of America or Goldman Sachs or looking at U.S. Steel is that things and momentum can change at any given time.

Look U.S. steel in 2016. It's pretty much bottomed out and made some extremely low lows - $10 level.

Then this stock slowly started to climb back. There were some pullbacks as well down the road. Also, there was an ABCD pattern right there.

The stock rejected higher prices at that point and then came back to retest some support levels based a bit. And then again we accelerated due to the political effects.

This stock has transformed after move sideways into again powering and moving higher. I believe we're a little too far extend because as we start approaching this $40 price level.

As you look at things and you start looking at the bigger picture you might ask yourself:

Where was this stock before?

Well, you can see it was in the $60 and even at the $160 level many years ago in 2008 right before we had the economic recession.

If you look at Bank of America, there is the same thing. Remember there's a reason why we go to history. There's a reason why we learn history or go to history class in school.

That things typically repeat. We learn from our mistakes. But unfortunately, human behavior doesn't always work out that way.

Then you might be wondering:

What will happen in the future?

Well, in the past we've had recessions. In the past, we've had depressions. That means we will probably have another one coming up.

How soon?

It could be in 10-20 years, who knows. It could be in 2 years. Nobody knows the exact date.

As these things continue to power higher and they get into overextended price levels, you'll probably see it again move sideways and then eventually a pullback. It will happen.

Now we're starting our stair-step move to the upside. As you can see we're starting to break out and move to the upside. This can last for years. If you look at history, you can see some of the significant pullbacks and then again you had a good run.

Let's say from 1990 to 2000 - about a good ten years. And then again a significant problem and pullback. After that, there is still a good run and again a major problem.

When you look at this, we're probably going to get a good run for maybe 5 to 10 years. It could be I don't know.

And then you might get another pullback. That's the way things work. You can see that things are shifting and things shift. That's the lesson to learn.

If you look at Goldman Sachs, the same thing will happen as we get a run-up to further extended prices, you'll more than likely get pullbacks as well in the future.

Things are changing, and things are rotating. And you also have to change and evolve.

Apply These 5 Lessons

Looking at these different lessons from 2016 there's a lot of different ones that you could have learned. There's probably many more beyond the ones that I've mentioned.

But for time sake these are some of the quick ones that you can go back and digest from for yourself personally.

What Was My Biggest Takeaway?

I'll tell you what the thing that I need to work on when it comes to my trading is.

Well, for me it was the first initial lesson. When you have significant events especially political events that could shift one way or the other the lightening up the positions would have been better for me.

I try to stay a little more balanced in those situations anyway. Just like with the election right here and then also as we get into Brexit right here.

The number one lesson for me to learn between these two events was to lighten up my positions even more so. That was the case because we always think that we are better than what we indeed are.

Even though my trading is pretty good and I like the consistency of it, I would still like to watch some of the things in areas and when we have major political risks. Especially when things can go one way or the other.

And more so when we know that they're coming as far as federal interest rates rise and overall company earnings. I already know how those things will play out because we get them periodically and consistently. Those things I typically don't worry too much about.

It's those big moments such as Brexit or such as the political elections which don't happen every single year that I need to be a little more cautious of in the future.

That's my biggest takeaway and things to learn from. I wonder what's yours. You have to be honest with yourself as you start looking and trading and continue to evolve. If you're not honest with yourself, it's tough to develop.

It's all about seeing yourself from that outside perspective and continuing to improve. You might have made some little mistakes, but how is it that you improve those small mistakes and continue to get better. It takes time. Do it step by step and continue to work on it.

This business is a business that you could do for the rest of your life. Even if you're making an extra $100 a week, $100 a month, it could help ease the burden.

The Final Word

Take those takeaways and learn from them. Continue to improve and evolve because once the clock switches your life isn't going to change instantly.

It's all about you doing the work and looking in the mirror and continuing to improve the actions that you've been doing over the past few weeks, months or years.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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