Most-Watched Stocks & ETFs On SA, Compared Via Market-Maker Risk And Reward Forecasts

Includes: BBRY, C, MCD, NFLX, SBUX
by: Peter F. Way, CFA


Put the market-makers and prop-desk traders on your side.

They tell what big-money funds are buying, how far those clients will push prices.

Not by what the sales types say, but by the way the block desk hedges its bets.

Likely price gains are today’s hedge-implied forecasts, worst-case price drawdowns are based on hundreds of prior hedges like today’s.

Those Reward vs. Risk Tradeoffs provide direct comparisons among the equities of most interest to Seeking Alpha’s many watchers.

Cut through the BS and investor-relations hype, the accounting gimmickry, and "street" analyst assertions about value, to the heart of the matter. In the foreseeable future (next 3 months) how much higher can each stock's price go? Based on prior forecasts by MMs like today's, what is the worst downside agony you might have to go through to get there?

(used with permission)

Those are the X - Y coordinates in this map of the most-followed stocks and ETFs on SA. Map perspectives: Good stuff down and to the right, trouble up and to the left, or above the diagonal.

In a troubled market like now, the consumer staples like [13] McDonald's (NYSE:MCD) and [1] Starbucks (NASDAQ:SBUX) are no surprise. Neither should be a high potential payoff with high agony prospects like [2] BlackBerry Limited (NASDAQ:BBRY). But [10] Netflix, Inc. (NASDAQ:NFLX) might come as a pleasant surprise.

Black sheep [16] Citigroup Inc. (NYSE:C) may confirm your suspicions - or dash your hopes, depending . . . How do the other bank buccaneers at [6] and [20] compare, from your perspective?

And then there are the S&P 500 index proxies at [22] to provide a norm for the Reward to Risk perspective.

To leave you with some contrast to the high-profile names, here is the exact same kind of tradeoff measurement for the 35 best ranked, but less well-known stocks, many of which have appealing wealth-building characteristics.

Do your own DD, but these all are what you get when market-makers are encouraged to put the firm's capital at risk to fill a volume trade order. Bet they know what they're doing?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.