There’s a remarkably simple strategy to keep you one step ahead of the market.
Lately, the stock market is a manipulated game of war waged by quantitative high-frequency traders, hedge fund managers and do-it-yourself investors.
Here’s an example:
Shares of Tempur Sealy (NYSE:TPX) plunged 23% recently after the company warned its operating results would be weaker than expected.
That drop comes on the heels of more than 30% move higher in August—thanks to strong second-quarter earnings. It’s enough to make your head spin, but crazy volatility is the norm these days.
Investors are looking for guidance… How do you make sure you’re on the right side of these moves? Sadly, many investors avoid the game entirely.
But there’s a better way: Embrace volatility as a money-making opportunity. You have to remember that all investors—including the quant machines—are programmed to buy profit growth at the cheapest price possible.
There’s one proven metric that identifies those stocks: PEG, or price to earnings growth ratio. Following PEG gives you the best odds to be on the winning side of the game.
Let’s look again at Tempur for a perfect example…