There's the bell Jerome Powell calls it; we'll talk about that in just a moment. We'd like to welcome everyone here today to Trading Growth and Value Stocks. My name is James Boyd, and I'm with J. P., Jay Richardson, Scott, and others. Welcome to all now again this class: Trading Growth and Value. So when we say 'trading', what are we talking about? We're probably looking for a setup maybe two, three days or two, three weeks. It doesn't mean that the trade can't last longer, but probably in that sweet spot of two to three weeks. Okay, let's go ahead and get started. Now, again, notice it does say 'stocks'. Okay, so we're not talking about anything derivative like stocks, long or short.
Now, also remember that as we get started here today, the information here is provided for informational purposes only, should not be considered an individualized recommendation or endorsement of any particular security, chart, patent, or investment strategy. So all of us investors, we're a little different. We have different situations, right? And so you get to decide what you feel is right for yourself, or you might not just follow through at all. Okay, you're just learning. That's fine. Now, also remember that Schwab does not recommend the use of technical analysis as a sole means of research. Also, when we talk about if we bring up a stock that pays dividends, understand that there's risk associated with dividends. But not limited to the risk that the stocks may reduce or stop paying dividends.
There's other risk on top of that, but that's probably the biggest thing about dividends is, you know, the company might be a more mature company that's not growing as much, okay? That could be also something that you might say, I want something that doesn't pay a dividend. Well, that's why there's different types of stocks. Now, also remember that investing in stocks involves risk, including loss of principal. And today, what we want to do is let's take a quick recap from really what happened with the Fed's Jerome Powell. How did the markets fare? We'll take a look at the portfolio, two of them, and we'll kind of talk about some example trades here today. Now, when we do this, we'll also bring up some past trade examples. Now, JP mentioned that cash is a position, right?
Well, let's kind of talk about that. Let's take a look at how many positions the paper money account has and kind of see if it's changed anything, okay? And JP, I'm glad you mentioned that because some investors might feel likewise. So first off, trading, well, we look at this portfolio, right? There it is, 32, okay? And what you're gonna notice is, I just wanna kind of count since JP brought it up. We got one, two, three, four, five, six, seven, got eight, eight positions out of the 32, okay? Now, a little bit more that we could work with there. Okay, we'll talk about that. Could we put that to work? So you could kind of say that maybe two thirds is invested and one third sitting on the sideline.
Let's kind of look and see if could that capital be put to work. We go to the IRA. You're going to notice sitting here about 99.7. And what you're going to notice is how many positions? The answer is a lot. So historically, I used to kind of get caught up in like, well, how many positions and things? I mean, there's some good commentary around that, but it's really, I think, for some investors not the number of positions it's really the the risk that you're really managing, okay. And I could go into that in details, but really, it's it's not the number of positions it's the risk that you have on of those positions. Now, if you track that it's probably going to be on a spreadsheet or something like that where you can monitor what the potential losses could be and so on, it's a little bit more involved.
But a lot of people like to at least have a basic understanding of how many positions they have and so on. That's fine. But just also be thinking about the potential risk or some of the risks that could be had with a stop loss and so on. Now, notice that we have 23 there to work with. We'll look and see if we can put that to work. Now, one of the things, if you kind of feel like sometimes you sit on the sideline more, perhaps, it might be, let's say, the markets might be volatile. Number one. Number two, you listen to other people, okay? Everyone's an individual investor for themselves and they don't know your situation and you don't know theirs, okay? So it's very hard to kind of get a real sense.
That's why it's important for us to kind of teach you about investing because you know where you are, okay? Speaking of that, let's go ahead and take a look at the first. Let's start with just real quick, the S&P 500 real quick. So S&P 500. Now, this is the line that we've been working with, okay? And the line that we've really been working with is that 61, okay, that we've talked about for a couple weeks now. By the way, we're still above it, okay? Now, yesterday when we actually saw, that was the oval that we actually drew from yesterday, and we saw the price got down below the moving averages. Now, when the price gets down below the moving averages, you know, there could be a flag type pullback going on right now if we go back and take a look at where we are now these intraday lows yesterday and today were tippy-toeing on the 78.
6 retracement; now whenever we actually have a pullback like we're actually seeing right now now so far it's been a quite shallow one, we don't know nobody knows how deep the pullback is going to be, okay? You're watching the levels. So that level, 55, 78, 50, 54, 94; in worst-case scenario, 54, 18. Overall, though, we're still grinding higher. Now, some interesting things to note today that we saw in the market. Gold shot up the last two days and then faded today on Fed's Jerome Powell, okay? Fairly decent didn't turn into bear market territory, but did fade some of the move yesterday. We saw the Japanese yen go up quite a bit yesterday, and then it faded pretty aggressively.
So investors want gold to go up, at least some investors, but the biggest actually thing is you don't want those fear areas, the yen, the Swiss franc, and the gold to be shooting to the upside, because that usually means equities could be under pressure, and we've talked about that, okay? I mean, if it's going up gradually, that's one thing, but skyrocketing higher in those areas probably means stocks are under pressure. So when you look at the S&P, still holding, you look at the NASDAQ, you pull that up, where's that 78% line? It's sitting right there at 19,492. We're still above it. Same type of pattern here. We actually kind of see that we're below both moving averages. So we're kind of in this exhale.
When you run up and then you pull back, the pullbacks are important because you're trying to create a higher low, and that pullback takes time. Now, if we were to say something about this pullback so far, we would actually say, well, James, this is kind of odd. Yeah, the price is below the moving averages, but the color of the candles are green. What does that tell us? Well, it's actually telling us that, yeah, it opened lower, but it closed higher than where it opened. Same thing today. So my question is to you, then, why on earth? Are people pushing it up higher than where it opened? Well, this is what you call buying the dip, okay? And we saw the exact same thing here. We opened up lower, we rallied up higher and closed higher.
We opened up lower and then rallied and closed higher. Welcome to buying the dip, okay? Now, so on that set, we don't see any change. So if someone said overall, what do you see in terms of the trend? Feels shorter term. Kind of neutralist. Why did you say neutral? Well, because we're below the moving averages so far. Most likely we're in a flag condition, okay? Second, if we said intermediate over the last couple weeks, plural, there's been a little movement back to the upside. Now, the one thing that I can't stop thinking about, okay, this Saturday in Switzerland, Okay, we actually have the China and U. S. getting together, maybe talking about some things about trade. If you're a bearish investor, could you imagine being short over that if they were to even say that something remotely positive came out of that discussion?
One thing. That's the thing here. So I think if someone is bearish, you know, I don't know. I think that's. A lot of investors might say, 'I don't know, I'm not going to have a position, okay?' The market's already rallied back up like this whole thing never happened. And if something positive, just one thing, maybe two, comes out of it, you know, who's not to say that Nasdaq just takes out that prior high? Now, the other news we actually got out of today was we actually saw that, for example, President Trump, he rescinded the chips. the kind of, he curbed, he actually had said, NVIDIA, you're not allowed to export the chips. He actually rescinded that, okay? So we did actually see that today.
Now, by the way, we're bringing that up because it's actually regarding to technology. And you see that NVIDIA got a little bump on that, okay? We'll talk about that in just a moment. Last one, but not least, you look at the Dow Jones. So the takeaway after the Fed was there was no change, okay? Now, no change in the rate. Now, my friend said, my friend, okay? He said, I feel like Jerome's pal, that Jerome pal, is not going to be a motivational speaker anytime soon. Kind of thought that was funny. That's probably true, okay? He's very just kind of to the point, and he repeats himself, and maybe he's not going to be a motivational speaker. He might not have to be, okay? And that's not his job, but that was a little funny comment.
But overall, takeaway from this, Didn't really change anything, okay? Now, that's a major point, okay? Now, because a lot of people get worked up over it, okay? And sometimes it's not a big factor. You look at financials here today, they actually kind of try to make a higher low. Now, remember, when we talk about the higher lows, right? Pretty simple to see where these higher lows are, right? Red and green candle, push. Red and green candle, push. Red and green candle, push. What type of candle is that? Well, if we looked at technical analysis at all, it's really just a bullish engulfing. So really, we've actually had on financials the fourth higher low in a row. And we said this last week, if the U. S.
is going to go into recession, someone needs to tell financials and industrials, okay? Now, if you look at the industrials and say, are we seeing something similar there? You are. And if you actually take a look at the industrials, okay, shot up for I don't know how many days in a row, seemed like 100 days in a row. And then after a two-day pullback, one, two, you already see a trigger back to the upside. A trigger just means an up day. Okay. Some investors might be looking for a gap up in price. Okay, or maybe tomorrow close above the high of the low day, the lowest recent red candle is five, six. So the investors really watching to see can we trade above that high and/ or close above that high.
Now, are there any questions? So probably first takeaway for me was financials are still strong. Industrials are still strong. Again, recap on the index. Index didn't change at all. And some of the fear areas like gold, yen, Swiss franc, push down. Okay. And again, the investor, why does the investor watch that? Well, that's intermarket analysis. You're looking at how these different asset classes are affecting equities. As stock investors, what the investor does with stocks is not immune to other things, okay? Let's be honest here, okay? And that's why we look at the intermarket analysis. So when we say intermarket analysis, we're really saying stocks to fixed income, stocks to commodities, stocks to currencies, stocks to international markets, and so on, okay? So in understanding kind of there's correlation sometimes between those different asset classes.
That's why we bring it up. Now, the other one that we talked about yesterday was utilities, okay? Now, if we're talking about a situation where maybe the Fed might cut rates in the future, well, one of the areas that might benefit from that is utilities. They borrow lots of money; they make different projects to create utilities for the places where they are. That might actually help this area, okay? Utilities actually had a decent day yesterday and a little push here today. Now, the other area, so remember, if you were to overlay the interest rate, TNX, TNX, colon, CGI, you'd want to watch that, okay? So, as you're seeing the interest rate go up or down, how does that affect utilities?
The other area that actually might be getting to that point, could it be starting to breach resistance, it's really the staples area, okay? The staples are kind of at this point of, is it going to break up or down? And if you look at the last two just briefly, the technology, we're up near this area of resistance. If someone is a bear, the longer that you stay up near resistance, the greater the chances you could have to break above that. And right here, we're making a higher low, going right into the area of resistance. Last but not least, you look at the dollar sign IXC, the communication sector. It really went up to about the 518, faded off, but was really more benign for the day.
And it went up almost 100 days in a row. At least it felt like that, okay? So the communications have been quite solid. And what stock leads that area? Well, one of them, okay, is Netflix. And Netflix has been really a horse to the upside. Okay, now, let's kind of talk about some examples here. So are there any questions? So here's Wiley brings a good point. Wiley says, has been talking about a recession for four years now. Now, don't take this the wrong way, okay? Sometimes you just have to kind of mind your own business and watch yourself, okay? See, what we don't know is when people talk about stuff, and it could be anywhere; we don't know if they have positions that are bearish, and there could be some people that are trying to talk the markets down.
They're trying to get other people to think like they do. Now, here's the deal. I'm not trying to get you to think like I do. We're just trading paper money and doing examples of bullish trades. So it's not real money. But there are some people out there that could try to influence market participants based upon what they say or whatever they're doing. So always remember that. So yeah, you can listen to kind of what people say, but you also kind of have to take it with a grain of salt. Why are they saying that? What positions do they have and so on? All right, now, let's actually go to a couple of examples, and we're going to talk about some traits here. I want to go back to IBM for just a second.
Tell me what you see on IBM. Ben says, who would do that? You know, there's some special people out there. Okay, we know that people are special. Now, so if we look at IBM, let's kind of show this chart. Let me go back for just a sec, three-year weekly. And if you look at the three-year weekly, what you're now going to notice is IBM kind of seems to be kind of having a couple times where we kind of drop down and then it breaks out to the upside. Drops down, kind of a flag again, and then breaks to the upside. Now, I know what you're thinking. You're like, 'It's so easy looking back on it.' Well, we're kind of at that same exact point.
That yellow line that I actually have, we're probably kind of a little steeper flag, if you will. We're on a weekly chart. And so what the investor is trying to look for is can they get breaks, okay? Can they get breakouts? And can they get breakouts? Now, the one thing we've got to kind of talk about, and this does not change. So JP kind of talked about kind of having cash. Let's say if the investor had cash and they're going to put the cash sitting on the sideline. Well, whether the market is screaming hot, flat, or going down, the investor is just always managing risk. And if they're bullish or they try to be bullish, they're just trying to put capital to work where the stock is above the moving averages and they're trying to manage risk.
Now, I'm going to be very just blunt on this, and I'm trying to help people, okay? There's a reason why I'm saying this. When a lot of people, if people historically have told me, like I'm sitting on the sideline in cash, it usually really comes back to position sizing. That's really what it comes down to, okay? So in other words, the litmus test of proving am I right or wrong based on what I just said, if I asked you, a question, how much are you willing to risk on a dollar amount, okay, or percent of your account? How much are you willing to risk? And I'll even make it simpler. Dollar-wise, how much are you willing to risk? You got five seconds to type in your answer.
If you do not type in your answer, it actually only validates what I said before, okay? What I have found, when people tell me I'm kind of sitting on the sideline a lot, they've never gotten comfortable with how much they're willing to risk. What you might find is if you are comfortable with how much you're willing to risk, whether the market goes up, sideways or down, the investor is just focusing on taking that transaction and trading what they see, irregardless whether the economy is booming, stagflation or recession, okay? Now, let's kind of go back to this just real quick. So this is a key question, okay? Because if you say, well, James, I don't really know. Then it doesn't matter if the market goes straight up because you're never gonna be comfortable because you never answered the first question, okay?
So let's kind of go back to this. Let's say, for example, and by the way, we're gonna kind of use this to set up the trade. And let's say the portfolio had $32,300, okay? And let's say, for example, the investor said, you know, James, I'm willing to take 1% risk. Now, some people kind of view this as basic, okay? The problem is, it's not basic. We need to know this. This is the most fundamental thing there is. And if we said, hey, I'm willing to risk 1% of this. Now you might say, James, I'm not even willing to risk that. I'm only willing to risk half percent. So I'm going to do half percent. I'm going to do three quarter. And I'm going to also do 1%, okay?
Now, if you said, so if someone said to me, hey, James, I don't even know where to start. They might consider starting with a smaller number, okay? So if you take a look at this, and by the way, the other place I'd probably say consider practice starting is you could just say, 'Look, James, I'm going to really start off with a paper money portfolio, and I'm going to start with a half percent risk. And so any trade that we actually do is going to be risking $161.50.' If you said, James, I've graduated from that little [period], from that one, I'm going to go three quarters of 1%, or James, I've done that, I'm going to go to 1%.
But when people talk about risking greater than 2%, it usually probably means that like, well, for some investors, they wouldn't risk more than 2%. But that might be the cap for some investors. I'm not even going to go there. Over the years, we've talked about doing example trades. We've always stuck to 1% or less in our examples. Now, let's go back to work here. Let's kind of talk about how this works. Now, I'm going to repeat why I just did what I did. If someone says, and this is a common theme, that, hey, I feel like I always just don't have that many positions in. Is it a situation of you can't find the trends or is it a situation of position sizing? Okay.
Now, if we actually come back to this, I'm going to just bring up as a little sheet of paper here. We're going to just going to use this as the current stock price, stock price, little sheet paper here so we could all follow along. Let's take 253. 37. I'm going to take the support level. Okay, so that support level, where would we actually say that support level is? Well, let's go back to a daily chart so we can see this. The support level, I mean, if we looked at this and kind of said, where do we think that it is? I kind of have this white line at 246. I'm not really sure if we would say that that upper moving average is the support because that's a whole moving average.
That's going to be very, very, very close. I wonder if we just use the white line at 246. 25. Now, if we did this stop, okay, and I'm going to put 2%. If greater than price, greater than 50, okay, $ 50 bucks. So if the stock is greater than 50 bucks, we're going to take 2%. We'll take that 246. 25, less 2%. We actually got 241. 32. If we take a look at this, and we're going to call this forecasted risk, okay? Now, if we took this forecasted risk and actually said, okay, what are we talking about here? If we did this, and I'm just going to use that number divided by this, it's going to tell us what's the forecasted risk, and we're going to label this as per share, okay?
Per share, okay? So let me kind of go back to something for just a sec. If someone said, James, I don't know where to start. It is okay to start small. So if I say, what does that mean? Well, starting small would actually be in this case, risking a half of 1% in the paper money account. So if we say, let's kind of start there, but the other side of this is, well, how much capital is the investor gonna put in the trade? Well, some investors say, look, James, I'm gonna maybe put in maybe 5%, maybe 8%, okay? Maybe 10% in the portfolio. Now, I'm going to kind of start small. So if we had $32,300 and we said, what's the capital there?
Again, at first, it is not about how much money the investor made. It's are they comfortable with actually doing it and do they understand it? If we actually said, hey, we're going to put in 8% capital, $2,584. And if we actually said $32,300 and 10% capital, it's going to be $3,230. Now, the reason why we need to know this. Is when we actually go to do the trade, if we said, hey, that stock is $253, then all it's really going to be is it's going to tell us the number of shares we could do. That's if we were just position sizing based upon the capital that we could do. That's it, OK?
So all it's doing is saying, hey, if I said, James, I want to start small, $15, and that stock price is 253, then this number down here is just going to tell us the number of shares that we're going to be practicing. Does that make sense? So I'm giving everyone a little slice of participation. If you said, James, I don't even know where to start. I'm going to start small. If you said, 'I'm going to start in the middle, I'm going to start a little higher.' And if you said, 'James, the capital size,' again, this is we're talking about 8% and 10%. Now, all of a sudden, we're going to practice kind of different positions. So here's what we kind of have to think.
If we buy six shares of IBM, can we actually take, so if I did six shares, okay, six shares, and we lost $12. 04, well, can we take that risk? The answer is sure we could, because that's $76. We could take $161 risk. So sure, we could buy six shares. Yeah, sure. Now, if I could, I'd go up a little bit higher. Well, if we said capital size 8% of the portfolio value, it's going to be, in this case, 10 shares. Well, could we do that? Well, if I did 10 shares times about $12 risk per share, it's $122. So wait, could we do that? Yeah, we're still below the half of 1%. Now, what's the point?
The point is, Sometimes our fear, it's in the mind, and we haven't really run through the numbers, okay? Now, if we take a look at this, if I did a position, let's say 32. 30, and that the number of shares we're going to do is, in this case, 12, excuse me, we're going to buy, let's say, 12 shares of stock. And if we actually said, what's that risk per share? The answer is 153. So does it matter whether we buy a 5% position, an 8% position, or a 10% position? Does it matter? And the answer is a swift, it doesn't matter. Okay, it doesn't matter. Because if we bought a position 10% of the portfolio, and that risk is $12, we could go out to 10% and pretty much actually have a forecasted loss of $153.
Which is no more than a half of 1%. So let me just ask you, what is the investor nervous about? They're nervous because they didn't know the answer to the question. How much are they willing to risk? When you kind of lay it out like this and walk through it, you're like, oh, maybe I'm making a more bigger deal, okay, than maybe it really is. But let's just do it anyway, okay? Hopefully this helps. So what I like to do is I'm going to, in this example, we're going to go back. Now, let's kind of see how much capital we have. OK, so I'm going to go back. Let's kind of imagine the investor said, 'Hey, James, we're going to go back to that paper money portfolio.
We're going to go back and use that smaller dollar account. Let's imagine the investor said, 'I'm learning how to swim and I've never swum before and water scares me. OK, I'm going to go to the trade tab, right click on the ask price, buy custom. We're going to go with OCO bracket.' Now, what we're going to do in this case is we're going to go ahead and we're going to click on the number of shares. Now, remember, it didn't matter if we bought six shares. Let me write this down so you know where we're going. Number of shares. Number of shares. Okay? That's the number of shares. This right here is the percent capital of portfolio. Okay? And this is the percent risk willing to lose. Okay?
And that, of course, is just the dollar amount. All right, now let's go to work now. Now we put it on a sheet of paper. Now let's just pound it out. So what I'm going to do is let's just fill in that kind of line there. Well, if we did that, it says 12. 7, okay? There's no 12. 7. We're just going to round down. So that's going to give us 12 shares. Okay, fine. Now the stop that we actually had before, which we wrote down, was $241. 32. Now here's kind of what the fun part is. This is the fun part, okay? The fun part is when you kind of have a repeatable process. That's what's fun. Most people don't have it. They talk about it, don't have it, okay?
Now, the biggest actually thing, but not you, not anymore, okay? Now, if we do, we're going to come back to this and say, okay, on IBM, where does the investor maybe think that stock could try to go to? Well, remember, the reason why we did the example trade on IBM yesterday is we said, 'Hey, one, if the stock were to break 254, the path of least resistance might be 264 and change. Well, if we did this, we're going to put just a target price of 264, and I'm going to kind of just put, let's say, $263. 50 or so, okay? Now, we know it's a little bit higher than that, but we just know that, as technicians talk about, it's an area, okay?
Now, if we go back and kind of say, 'Okay, we walk through the position side.' Now, by the way, you can be very knowledgeable about the market and never invest, ever, okay? Because you never answer the first damning question, how much are you willing to risk? Okay? Now, when we now talk, but this is major, okay? Now, when we actually talk about kind of the fundamentals of this, when we actually bring up, let's say, the IBM, and we kind of take a look at where they are, well, and by the way, a lot of things we actually see in tech stocks have been quite really interesting, especially with Google here today. In Amazon, no, excuse me, Apple. Now, when we talk about sales per share, we're just talking about the revenue over the number of shares outstanding.
And this has been pretty consistent. Now, you might say, well, why is that of interest? Well, you want to know if there's different strength in the economy, super strong, weak, whatever. Can the business continue to get the same, the sales, are they consistent? And for example, Over different economic periods, whether we're robust or kind of volatility in the economy, can they be consistent? And the answer is they have been. The highest really came from in 2023. And if you look at the earnings per share, which is really what the investor wants to know, sales is important because you need the sales to get to the net income. You can't get the net income. I mean, if you don't have any sales, how are you going to get net income?
Now, if you take a look at this, again, the biggest year really came in 15. Now, also remember, why do some investors try to target some of these companies that pay dividends? Well, wonder if what's not constant is stock appreciation. Now, dividends, they're not always constant either, especially if the company changed the dividend policy. Now, the biggest actually thing is when you look at the dividend over time, That dividend has actually gone up over time, and it's been pretty consistent. So investors kind of like sometimes consistency. Does that make sense? Are we on the same page here? Now, I know there are some people who just always want every day to be a roller coaster ride, but some of the investors say, no, I actually really don't enjoy that, okay?
And that's not the purpose of the capital anyway. Now, what I'm going to do is I'm going to bring back up that trade, go confirm and send. Now, remember, we took what was on that little sheet that we just made on the fly, and I didn't plan to talk about that at all. But JP kind of just hit that up, and I said, hey, let's just talk about riding the wave. Now, in the next 15 minutes, let's kind of look and see if we can push three more in. Now, here's the deal. In the investor's eyes, let's kind of think through this, okay? Let's say the stock goes down. Now, why did I call this the forecasted risk per share? The reason why we call this the forecasted risk per share is because we're making an assumption.
That the stock goes down to the stop level and it gets hit out. The loss could be more severe because we're talking about a stop loss. It's not defined risk, okay? So we're going to say the forecasted risk per share, okay? All right, now here's what we're going to do. Let's kind of grind again on this, okay? So I'm going to go IBM. Let's send that bad boy. Now, what I want to do is one of the other ones. When we talked about financials, can anybody remember one of the stocks or a couple of the stocks we talked about in the financials space? Can anybody remember? We talked about a couple of them, right? We talked about V, and we kind of said, maybe is that stock trying to poke its head above resistance?
And if we take a look at, let's say, MA, is that stock kind of looking weak or is maybe getting above the area of resistance? And it has. You look at AXP. And here's what's kind of interesting is when you look at like an industry group, and you kind of notice that they all kind of look the same. Is that a bad thing? If you actually look at COF, it kind of looks like a little reversal here, okay? You take a look at that right around 154, and it might be trying to go higher. We take a look at one last one, DFS. You take a look at that, and it kind of looks like the same thing. Right on the cusp or right near the area of resistance, could it maybe go higher to the next level of resistance?
Now, the one that we're going to show an example of, and we're going to go to travelers. OK, TRB. OK, now someone might look at this and say, man, I never would buy something like this because it's gone straight up. OK, well, you know, what does that tell us? So if you have a brand new high, that's confirmation of trend. OK, now, if we take a look at the kind of the fundamentals just real quick, kind of where it's been analyzed, got the fundamentals. You're actually going to scroll back. Now, the biggest actually thing it says it provides a range of commercial and personal property, casually insurance products. Now, let me ask you a quick question: Over the last four to five years, have those rates stayed the same? Have they?
Have those companies paid out twice as much because they collected potentially more? Now, if we take a look at this, what we're now going to notice, which should not be a surprise. OK, you actually see sales per share. It's been like a nice little stair step. OK, you look at free cash flow. What a surprise. Brand new high. You look at the earnings per share. Oh, what a surprise. OK, so as those little policies of property, personal and commercial casualty insurance products and so on. OK, you're seeing that they've kind of collected a nice little chunk of change. Now, here's the thing. Just because we can read numbers does not mean we're an analyst. And we can see that. It's all over this page, okay?
Now, remember, it wouldn't take very long to find a financial example because we're looking blasted right in the down, okay? Now, if we take also a look at this. Now, by the way, we're only talking about the kind of things we see on the income statement. If we want to actually see, let's say, things like on the balance sheet, RE, ROA. That's a pretty solid actual number, the RE of 18 plus, okay? Now, what I want to do is if I take a quick look at this, let's bring back up our sheet. And that's kind of really kind of, because the fact of the matter, you can pull up any chart you want, but if the investor doesn't feel comfortable with the basic numbers, it doesn't matter, okay?
Now, what I'm going to do is let's kind of run our example. Now, what I'm going to do is I'm going to say stock price. What's the stock price? 268, 286, 286. Sorry, I speak German. I always go backwards. Okay, 268 . 86. Okay, there you go. Support level. Now, on this, the investor might say, James, I'm not going to take it under 267 . 77. I'm going to try to give it a little bit more breathing room, maybe 264, maybe 262 . 6. Now, if we gave a little bit more breathing room, what does it do? Well, it's going to cut down the number of shares we can do. Now, these were kind of our selections. Half of 1%, 0 . 005. 0 . 01 would be 1%.
0 . 00 75, that's 1%. 0 . 0075, 3 quarters of 1%. Don't worry. We've all had trouble with that. That's why I'm going over that. So if I looked at this and said, OK, here's the stock price. Here's the support level. There's the stock price. And now what we actually see is just looking at the forecast risk per share. It's $11. 51. Okay, now let's imagine we said, James, I'm willing to risk a half of 1%. Alright, so now let's go over here. If we said we're willing to risk, invest. And let me kind of write this down. This is the money investing, okay, of the portfolio. 5% of the portfolio, 8% of the portfolio, 10% of the portfolio. Okay, now let's look and see if it matters.
So what you're now going to notice, if we did 5% and we said, hey, I'm willing to risk $11. 51, it doesn't matter. $69, $110, $138. What does that mean? That means that if I actually went out to, let's say, $3,230, it'd be 12 shares and the risk per share is 11. And that loss is really $138. Now, here's the moral of the story. If the investor doesn't take risk, the return is zero. Now, here's what the investor could say. Well, you know, if you have cash, right, you can get a return of 3% or whatever. The problem is if inflation is 3%, the real return was zero. You get the nominal return, let's say 3%, subtract out inflation. And it's zero.
So what did the investor gain? And this is what I think some investors don't quite understand of why does there always tend to be an underlying catalyst of stock investing? Because you're trying to outpace inflation. Now, are we saying that all financial products only get 3%? No, some are actually higher than that. Okay. But the biggest thing is the investor is trying to get a bigger spread between after-inflation return and what was the actual return. Okay. Now, if we take a look at this, we're going to show the example. Let's go back to work. And then what we're going to do is on this, we're going to go back, bring back up Travelers and we'll pull back up TRV. And now what we're going to do is on this, we're going to right click on this ask price.
Now, remember in the after hours, 241. 297. What does that tell us? Market's closed. Okay. And now what you're going to see is by custom, we're going to go with OCO bracket. I need help with the target. All I'm going to do is going to use a little sheet of paper that JP helped us make. Thanks. Everyone thanks JP for that. Thank you, JP. And now what you're going to notice is, now, by the way, some people, maybe back in college days, used Excel for Dummies. Don't get offended. That was what it was called. And all Excel is sheet of paper anyway. Okay, got 12 shares. Now, we got the price. Now, if the market's closed, we're going to take the last traded price right there, 268. 86. Got it right this time.
Data GTC. And then the stop that we mentioned before is 257. 34. All right. Now, last thing we really need help with is, are we going to put a target? Well, if we went back to data GTC, fine. But let me go back to that target for just a moment. And that target, when we looked at that chart, well, what I'm going to do is I'm going to try to kind of see, let's go back to weekly chart. Sometimes it's easier to kind of see patterns or channels on weekly charts, just kind of less noise, less candles. So if we looked at this, some technicians might say, James, I'm going to use a Fibonacci extension. Longer term, or they might say, James, I'm even going to take the bottom of the channel
to the top of the channel; that bottom of the channel to the top of the channel is going to be about 34 dollars now if you said James look, that's just pie in the sky okay, I don't even believe it, I mean I'm only going to take a target half as much, I'll tell you what that is, it's 17 bucks so let's kind of put both of those there; 17 could actually maybe the ballpark-wise around $28. 4 Now, some of you are still hung up on those financials, you were like, my gosh, I knew those policies went up. I didn't realize it went up that much. Don't be mad at me. It wasn't me. It was Ben. No, here's the deal. No, Ben's a good guy. It wasn't Ben.
Now, here's the deal. We're going to take 34 on top. So I'm just marking both of these. Now, some people would rather actually have lower targets with a greater chance to hit it. Okay. And what you're now going to notice is the upper line, if we got there, that's if we got there. We don't know if it's going to go there. 301 . 80. All right. Now, let's say you said, James, I honestly don't know. How do I pick? Let's say the investor says, James, I'm going to just choose something in the middle. I don't want this first kind of area because I wonder if it's shoe trade past it and now I'm going to have remorse and regret. But maybe I kind of get something there in the middle.
That's if it goes there. We're going to put, in this case, 293 flat. And what we're going to do is type that in, 293 flat. Now, do you have any questions on this? So now remember, there's a lot of people that have invested for a long time. And we've seen bullish markets. We've seen flat markets. We've seen bear markets. Irregardless, the investor is managing. And they're saying, how much am I willing to risk, percentage-wise, of the portfolio value, which will give you the dollar amount? Okay, so we need to know the percent to get to the dollar amount. That's why I asked those first two questions. Now, next, does the investor consider 5%, 8%, 10%? In the two examples we showed, it didn't matter if we went to 10%.
Because the risk was still less than a half of 1%. Now, can that change? Yeah, okay? And that's when the investor might say, hey, I'm not gonna do 10%. I might only do five or 8%, okay? Now, what I'm going to do in this case is I'm going to go confirm, send, save. Now, let me kind of fire back in a couple stocks that maybe as investors, some investors might be watching, okay? So a little homework assignment for you. I don't care if you did this on a blasted sheet of paper because we made it right up on the spot. This isn't some special sheet of paper here, but these are some things that you're going to be doing over and over and over.
I'm going to tell you right now, it's enjoyable when you say, oh, I actually, I have something that I'm willing to risk. Not Josh, not Wiley, because they're not you. Ben's not me and I'm not Ben. And Ben's fine with that. So, the biggest actually thing is it's going back to this because we can find companies that have strong fundamentals and technicals, but it doesn't matter unless they're comfortable with how much they're willing to risk and how much are they going to invest capital-wise. Now, a couple of stocks we're just going to kind of point out here. Google today, the exec at Apple came out and actually said that AI is going to put Google, the search Google, under pressure because AI will become the new search. Interesting.
Think about if that were to even be remotely true, that AI now becomes 30% of all searches, 50% of all searches. Who's one of the biggest search engines out there? Now, think about what that might do with sales and also earnings and so on. I want you to kind of keep an eye on Google for that. That just came out today. Now, other stocks that we're also going to keep an eye on, Johnson & Johnson. I think the longer and longer the volatility goes on in the marketplace, it kind of makes you wonder if more and more portfolio managers might start to be investing in a little bit more blue chip type companies that have more revenue consistency and earnings and maybe pay a dividend that are not guaranteed.
I'm going to keep an eye on that one. We talked about PM, which also hit a brand new high here today, and MO that has not hit the 161, but these have been pretty good pushes here. One other one that we're going to mention here is Booking Holdings. Now, Booking, you could actually probably say that this is like the mothership of all travel websites, at least a majority of them. And what you're going to notice is it has a monster intermediate longer-term and it poked all the way back up. I want to give you a quick heads up. When we were all the way down at 4,000, this stock has shot up 26% in about, what, just a couple weeks, okay? And so you got to remember something.
When something drops and the business is consistent, a lot of those drops can actually be potential examples, okay? Last one, we'll close here, ABT. ABT, we're also going to keep an eye on. We actually have a crossover there. And we actually see also on the daily chart a little break there and it has like a little setting triangle pattern okay so there's a couple stocks here okay where the investor could probably say I'm seeing some potential trends and let's practice so what I want you to do for homework is I want you to identify for yourself because that's the only person matters okay how much you willing to risk dollar wise and percent wise how much you're going to invest in terms of capital, like we practice.
And I want you to go out there and punch two or three of them in the paper money account every week. Okay. Now, if you don't do it, I'm going to stick Ben on you. Okay. A little fun with Ben there. Now, just real quick. So many stories to tell with Ben and I. Now, remember with what we discussed, it was done, for example, in illustrative purposes only. Hopefully you actually realize that we try to have a little fun along the way. Go out and practice these things, okay? And realize that all investing involves risk. And that's why we try to actually do the position sizing. So hopefully this has been helpful for you. And thank you for being frank and honest. I appreciate that. Hopefully today was a help. Stay tuned for coming back tomorrow. Ben will be doing the Advanced Option Workshop tonight. Join him, okay? And we'll see you back tomorrow as well. Take care. Bye-bye.
