FRX... limits hit and done

Good morning,

US private companies shed lesser jobs than the last reports indicating some stabilizing in the labor market but it is still larger than analysts’ estimates. Crude oil and related commodities had larger supplies and the Federal Reserve says the economy is getting stronger. The market had reacted to all these and closed flat but bulls beat bears by about 3 to 2 last night. My wife asked me while I was trading why do the stocks prices change whenever there’s news and reports. Perhaps there are many novice traders also asking the same question. It’s because of earnings. Companies (other than non-profit companies) exist to maximize wealth for their stakeholders. An efficiently run company maximizes its revenue with efficient usage of its assets and resources. It’s not easy and it’s a heavy course itself in Corporate Finance, but the bottom line is the company must make money at the expected returns of the stakeholders. Operating profit is one of the main factors and a company is valued by forecasting its operating profits for the future, determines its free cashflows and discounts this number back to present value with the expected rate of return. Company’s earnings are often highly correlated to the economy and industry factors and any news or reports can affect the forecasted earnings and therefore the value of the company can change today. Thus it is important to understand the company’s industry, business and financials before the stock is traded. It was often mentioned that good MBA graduates can be good investor s if they can apply their understanding in strategic management in analyzing the companies for stocks to buy.

My FRX was sold last night at limit price of $31.66, making some healthy returns for me. The counter closed 1.77% higher at $31.56. NOV lost 0.5% last night to close at $43.86. It went as low as $43.29 and I bought a new position at $43.69 and had another market order opened at $43.30 while I was sleeping.

SIM was down 1.72% to close at $8 and GIB gained 0.4% to close at $12.53.

Have a great day.

Francies Cheng
BBus MAppliedFinance