If you’re a fan of the stock market, you definitely will have noticed the above average volatility over the last year. The C19 pandemic really put companies worldwide to the test, with some unexpected price booms, as well as other unsavory wipe outs.
So how do you navigate through hundreds of global stocks and which stocks have caught our attention over the past 12 months?
Trading stocks is much like navigating a ship, understanding how to sail through the storms, whilst limiting the damage. Risk management is key in order to mitigate unnecessary losses.
Take a look at the below chart of Zoom (NASDAQ / S&P : ZM)
The green vertical line marks the second week of February 2020, which we later see as the “pre” beginning of the C19 stock market crash. Zoom, out-performed all expectations according to organic growth – why?
Quite simply, the cloud based video communication software was embraced world wide in order for companies, education providers and even governments to continue to function throughout the global lockdown.
If we adapt our trading decisions according to the current news, or conduct effective “fundamental analysis” we increase our chances of making successful trades. It may seem like an obvious statement, however “failing to prepare, is preparing to fail” paraphrased from Benjamin Franklin.
During the period of Feb 2020 and Oct 2020 Zoom shares soared from $90 to almost $600; or an increase of over 550%, without leverage!
Now let’s take a look at the S&P 500, the index housing 500 of the largest companies traded in the United States. (Zoom entered into the S&P earlier this year, January 2021)
The above chart is using 7 day candles. You will notice that around the same time Zoom began rising up the ranks, the S&P began a steady decline (indicated by the red vertical line). In the short space of a month, we witnessed a staggering drop of 35% (give or take) before eventually seeing a gradual correction over the remainder of the year.
By mid August 2020, the S&P eventually managed to climb back up and even break previous all time highs of $3389.78. Since the lows of March 2020, the S&P now comfortably sits at $3,898.81 (at time of writing) or, approx 80% growth!
Now, let’s get back to the Forbes Billionaire part.
Below we will look at the charts of Amazon, Microsoft, and Tesla. All three stocks have performed very well over the past 12 months.
Amazon (NASDAQ / S&P: AMZN)
Jeff Bezos is currently at the top of Forbes Billionaires list, ranked #1 – his current net worth is $179.6bn. Bezos is the founder and CEO of Amazon.
The share price fell as low as $1,626.03 during the C19 crash. However due to the increase in online shopping, including the delivery of everyday groceries from Amazon Fresh during the lockdown, the stock steadily climbed to an all time high of $3,552.25 by August 2020, or an increase of approx 118%.
If we look at the below chart, (daily candles) we can see that the stock is currently in a range, which it entered in July 2020. If we expect to see a continuation of this range, Amazon stock could represent a good entry point awaiting a potential rise towards its previous all time high.
…next up, Microsoft.
Microsoft (NASDAQ / S&P: MSFT)
Bill Gates is currently ranked #4th in the Forbes Billionaires list – his current net worth is $125.6bn. Gates is the co-founder of Microsoft.
The share price fell as low as $132.52 during the C19 crash. Microsoft has continuously adapted and evolved according to consumer needs, with its cloud computing service Azure, keeping the brand relevant. MSFT stock reached an all time high of $246.13 in February 2021, or an increase of approx 85%.
Last but by no means least, we have Tesla.
Tesla (NASDAQ / S&P: TSLA)
Elon Musk is currently creeping up the Forbes Billionaires list, ranked #2 – his current net worth is $165.1bn. Musk is the owner and CEO of Tesla.
The below chart appears to have a large dip on the 31st August 2020. This reflects the decision for Tesla to undertake a 5-1 stock split. In simple terms, the value of each share was divided by 5, meaning the price may be more attractive and affordable for new investors wishing to purchase whole shares.
Existing shareholders are not affected by stock splits, rather in this instance, each shareholder received 5 shares per 1 share they owned, meaning the monetary value remained equal.
Keeping the stock split in mind; the share price fell as low as $70.10 (adjusted) during the C19 crash. These days, Musk is a household name, known as an eccentric entrepreneur, often compared to the fictional Tony Stark. He is controversial and a force to be reckoned with. TSLA stock skyrocketed to an all time high of $900.40 in mid January 2021 or an increase of approx 1185%.
The above number does not include leverage! 1185% is the true growth of TSLA stock during this period.
Essentially, trading will always carry risk; but if we keep our ears to the ground and pay attention to current global affairs, we can unlock the opportunities which await us and enjoy the potential profits from our trades!