Forget the “deep dive” analysis, forget the charts, forget the DCFs, the comps, the “expert network”, the “information arbitrage” or insider trading. Forget talking to management, analysts, or employees or even having to pretend to manage money on Yahoo Finance Twitter to impress people you will never meet.
Courtesy of JPMorgan, here is all you need to know to become a successful trader.
After the dovish hike yesterday, extreme short positioning in bonds, and the selloff in rate sensitive assets (such as precious metals and REITs) snapped back. The short squeeze in these assets could have some momentum in the next several days. The dovish Fed outcome implies that the ‘Fed Put’ is likely still alive and well, so investors should buy on potential market weakness that we think could occur over the next month or so. This approach of buying on weakness is known as “BTD – Buy the Dip” (last two years virtually all of the market’s returns occurred one day after any the pullback i.e. ‘the Dip’). Success of the strategy is often attributed to the dovish resolve of central banks.