Guideline:News monitoring

Return to:Guidelines

If there is anything that the current macro environment has taught us is that the stock market can be very volatile to company and economic news. Therefore by monitoring such news, you will not only avoid losses but also be able to take advantage of opportunities presented by such information. However, the fact that not all news is reliable and consistent calls for a monitoring process that examines each piece of news in detail, hence preventing you from changing your investment thesis for nothing. This article describes the monitoring process that we currently use. Our monitoring process may not be the best, so if you feel there is anything we can change to make it perfect, feel free to let us know. Remember that our monitoring process is carried out purely in the Discord channel. As such, the process may not be applicable outside the channel. Below are the two steps we have employed in our news monitoring process.

Tipps

• We are working to curate a list of sources for each company we are covering which yield to best news, developments and insights into how those companies are developing.
• If we are seeing strong (3%+) price moves it is particular important to understand the reason for the move. This could be simply caused by macro. If a macro cause is unlikely it is especially important to check all detailed sources we curated to find any possible new developments.
• If nothing is happening it might be sufficient to check news for certain companies only once or twice a day.

Regular Process

Step 1

This step covers how we obtain stock and economic news in the most efficient and reliable manner. We rely primarily on app notifications, but we also have email alerts. To make sure to get everything critical, we also google for news once in a while during the day. Here are the methods we use.

(a) Email Notifications from CapEdge

The CapEdge enables you to set email alerts for filings by US-listed companies. This is among the fast and reliable methods we use to get important news about companies in our portfolio. You can set the alerts by clicking on the link: [https://capedge.com/features/sec-filing-alerts]

(b) Email Notifications from EQS news

Like the SEC, EQS news enables you to keep tabs on fillings by German-listed companies. It's also one of the most reliable and quick methods of getting important news on the company. To set up a watchlist, click on the link:[https://www.eqs-news.com/watchlist/].

(c) App Notifications

Many news apps enable you to set push notifications for stock and economic news. Our monitoring process employs the following apps:

-The Wall Street Journal

-CNBC

-Bloomberg News

-Seeking Alpha

-Yahoo Finance

-Investing.com

Once you have installed these apps, google how to set up the notifications. In most cases, you will have to set up a watchlist and allow the app to send push notifications when news related to your watchlist breaks. Remember to turn on your wifi at all times to receive the news in real time. Also, click on these apps now and then to prevent them from freezing up. Once these ups freeze up, you won't receive notifications.

(d) Google for news once in a while each day

Sometimes, the apps delay sending the notifications. This may have far-reaching consequences on the portfolio. Therefore, googling news on the stock now and then can help us benefit from them as soon as possible. Google has a way of giving you news on each company in one tap. This will reduce eye strain and help you read through the news as quickly as possible. By clicking on: https://news.google.com/search?q=volkswagen&hl=en-KE&gl=KE&ceid=KE%3Aen, inserting the company's name, and hitting "ENTER," you are given the company news starting from the most recent. You can also search for news in sites that cover it eg https://www.investmentwiki.org/wiki/1%261:Sources#:~:text=Article%20Sites%5B,boerse.de

Step 2

The following are the things we do once we receive the news.

(a) Apply your analytical skills to judge if the news is important.

(b) Some news requires you to have some knowledge about the company to assess them correctly. If you can't judge the news, consider contacting the researcher in charge of the company. However, if the researcher is unavailable, check how the market reacts to the news. If the market is not yet open, looking at the pre-market movements and the reaction of stock futures can tell you how important the news is.

(c) Once you have assessed the news, assign them an importance rating denoted by I and the expected short-term impact on the stock represented by SI. Here is an example;

SI=-3%, I=9

A social media post by Meta's CTO Andrew Bosworth indicate that the company will continue spending 20% of its total cost and expenses in reality labs in 2023.

In the above example, the news on Meta is expected to cause an impact of -3% on Meta stock, and the news has an importance rating of 9.

(d) After you have assessed the news's importance and expected short-term impact, you can decide to post it in the relevant discord channel. Bear in mind that not all news should be posted in Discord. Some news has a low importance rating and may not affect the stock. Hence, to be efficient, avoid posting them.

(e) If the news needs to be acted on immediately, contact the portfolio manager as soon as possible by sending him a message. The message can look like this:

Unemployment report big EXPECTATION MISS. Despite all efforts by the Fed unemployment numbers are are FALLING to 3.5% from 3.7%. This might be a shock to markets as economist and market participants EXPECTED an unemployment rate of 3.7%. This could force the FED to hike rates even more aggressively. The market is starting to react negatively and is down by 1% and i think this could worsen. Monitoring the situation now.

If the portfolio manager takes long (long here is subjective, i.e., it depends on how long the news should be acted on) to react to the message, do the following;

(i) If the news is very urgent: Ring him on Discord continuously.

(ii) If the news is urgent: Ring him once.

(iii) If the news is less urgent : do nothing

(f) You can gather more information as you wait for the portfolio manager to react to the news.

Examples

Here is an example of an optimal workflow when reporting on News:

Example

SI=0%, I=8

-The U.S producer price index(PPI) dropped 0.5% month-over-month in March compared to expectations for prices to be flat.

-Core PPI declined 0.1% month-over-month, way better than the 0.2% expected increase.

-Year-over-year, PPI rose 2.7% in March versus 4.9% year-over-year increase in February.

-The decline in PPI was mainly attributed to the 1% drop in the prices of final demand goods.

https://www.bls.gov/news.release/pdf/ppi.pdf

https://www.cnbc.com/2023/04/12/stock-market-today-live-updates.html

https://www.investmentwiki.org/wiki/Producer_Price_Index#Developments (edited)

Elements

It cointains the following elements:

1. Assessment of SI: the likely short impact of the news and I: the Importance of the News
2. Comparison of developments vs. expectations in a brief and clear manner with focus on key data + an explanation for the development.
3. Links to
   1. the original detailed release
   2. a news article which quotes expectations and gives some additional color and
   3. our Investmentwiki article on the topic which gives a clear overview over recent releases, trends and our assessment. (and is updated with recent data)