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I have been getting emails from a few people who are interested in long research. I have started offering long biased research, and am in the process of implementing another scan for long candidates this weekend. What I want to remind many of is that this is a fundamental research site, and a pretty good one, at least in my opinion. We have been right roughly 90% of the time in reference to the fundamentals. With that being said, I cannot control stock prices. There are times when stock prices diverge from the fundamentals. Those are the periods that precede money making opportunities. The actual opportunity is (after recognizing the divergence) when reality and stock prices converge.

Now, there are many other methods of making money, ex. momentum/quant/algo trading, etc. That is not what I do. For those who feel that they are missing out on the market rally (which is quite understandable), I cannot give you advice, but I can tell you one simple maneuver that I have used. I have purchased SPX calls that allow me to participate on the broad market upside and provide a hedge against what I consider to be a divergence from the fundamentals. How much of a hedge is quite variable, of course.

Make no mistake about it, from where I stand, the market is trading way out of its fundamentals range. If you look at the last serveral blog posts/articles, you can see where companies balance sheets and earnings power are diminishing, their outlook is dark and murky and the regulatory and macro environment are providing headwinds, yet their share prices are going up. As a matter of fact, their share prices are going up faster and with higher multiples than those companies that are doing just fine, with bright prospects and futures visibly ahead. These are not the ingredients of a sustainable bull market or good investments. They are the ingredients of momentum trading and gambling. I am an investor, not a gambler. 

There are ways to ride the coat tails of the gamble, but be aware that my outperformance of the past and throughout the history of this site has been based on scientific investing, not gambling. As, and when, share prices diverge from fundamentals, my investment style falls out of favor and performance dips. The good news is that fundamentals ALWAYS reign supreme in the end. I welcome any questions, comments and discussion.