Ep. 227 Tom Dorsey: How Stock Chart Analysis Gave This Inmate A Second Chance At Life
Jul 27, 2023
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Trading pro Tom Dorsey discusses teaching a stock market course in prison, the positive impact on inmates, and the success of his former classmate in the investment industry. They also explore the growing importance of clean hydrogen-based energy, trading algorithms, and the significance of relative strength lines in identifying potential stocks for rotation.
Stock chart analysis gave a prison inmate a second chance at success through an educational program on stock selection.
Investors should diversify their positions and look for opportunities outside of the tech sector.
Finding joy in the process of trading and making a positive impact on others is important.
Deep dives
Boeing Reports Strong Earnings with 8.7% Gap Up
Boeing (BA) broke out with an 8.7% earnings gap up, ending its flat consolidation. The stock had been trading in the 221 to 223 range for a while. With a significant increase in volume, this breakout could signal the start of a decent move. While it is not too late to buy, it may be wise to wait for a pullback or some consolidation before considering an entry. The future estimates for Boeing in 2024 indicate positive growth, which adds to the stock's potential.
The NASDAQ Composite remains in a tight range, showing resilience after recent distribution days. The index has come down to support around the 14,000 level and halted further selling. This kind of tight action suggests that institutions may be waiting on the sidelines, looking for opportunities to buy. The key level to watch is the 21-day moving average – as long as the NASDAQ stays above it, the overall trend remains positive.
Considering Sector Rotation as Tech Extends
With some in the tech sector becoming extended, investors may consider broadening their positions and looking for opportunities in other sectors. While tech stocks have been strong performers, it is essential to diversify and find setups that offer good entry points. Some sectors, like oil and steel, have shown potential to break out, but cautious entry is recommended. Balancing concentration in tech with exposure to other sectors can help manage portfolio volatility and potentially find new opportunities.
Tom's impact on education and trading strategies
Tom's motivational and educational books became highly sought after in the library, prompting interest and participation in the educational program on stock selection. Tom's support and teachings helped individuals transition from defined benefit plans to 401(k)s, empowering them to make informed decisions. Tom's strategies involved trading closed-end funds at a discount and trading options on indexes for supplemental income. His focus on education and innovative trading strategies continues to enrich the lives of those he assists.
The joy of meeting interesting people and the value of routine
The speaker expresses gratitude for the opportunity to meet brilliant individuals through interactions at the office. Spending time with Tom, they engage in stimulating conversations, discover new strategies, and continuously learn. Routine, developed through experiences within the corrections system, provides structure and stability in their trading approach. The enjoyment gained from trading and helping others is evident, with Tom going above and beyond to assist those who need guidance, even pro bono. The speaker highlights the importance of finding joy in the process of trading and the rewarding experience of making a positive impact on others.
On this week’s “Investing With IBD” podcast, Justin Nielsen and Irusha Peiris break down the market reaction to earnings results from Microsoft (MSFT) and Google parent Alphabet (GOOGL). Plus, trading pro Tom Dorsey joins the podcast to discuss how a program to teach investing principles to prison inmates helped one man get a second chance at success—and how investors can use those lessons to improve their trading minds
