Mullooly Asset Podcast #187: Tim & Tom Answer Investopedia Questions – Transcript

Tim: Welcome back to the podcast. This is episode number 187. Today we’re going to do something a little different. This is Tim. I’m here with Tom.

Tom Mullooly: Hello, everyone.

Tim: That’s the same, but today we’re going to do something a little different. We have some questions that come in on usually a weekly basis from Investopedia looking for advisors to answer them. We decided to pick out some of the good questions that we got over the last week and answer them for you.

Tom Mullooly: Right. What we’re doing now is we’re really just kicking around the answers. These are not the formal answers that we would post online, but this is just two people talking. If you were here in our office instead of listening on a podcast, this is the immediate response that you would get, not something that’s been picked over and polished up for a letter or a blog post, but really, it’s just two advisors sitting around talking to someone who’s got some basic investing questions.

Tim: Right. Just answering them off the top of our head. Not getting too bogged down in researching the answer and making sure they’re perfect.

Tom Mullooly: Right, right. We’ve got a handful of questions. I think we’ve got five or six, so let’s …

Tim: We’ll dive right in.

Tom Mullooly: … see how far we can get.

Tim: Sure. First question. “Where can I check the most active stocks during pre-market?” It goes on to say, “I recently learned about pre-market trading. Is there a commonly used resource for how to check trading volume during pre-market, and how can this be interpreted as a potential tool for investment strategy?”

Tom Mullooly: Okay. The first thing I would tell you is if you’re going to be really serious about doing a lot of trading, like the person who wrote this question might be, is invest the money. Spend $2,700 a month and get a Bloomberg terminal.

Tim: Right.

Tom Mullooly: You’re going to get all the information you need. Other than that, there are some … You can go to a lot of these free financial websites or you can get a subscription to the Wall Street Journal or MarketWatch, some of these other sites that you’re going to find online. But just be aware that the volume that is posted is usually stale. It’s not always reported. We find the same thing with exchange traded funds, in that the volume that’s reported may not be the actual traded volume that particular day.

Some of the stuff gets posted late. Some of the stuff doesn’t get posted at all. You have to be a little skeptical of these numbers that you see, especially in pre-market trades. One of the things that I used to caution to clients when they would … When the internet and CNBC really started taking off in the late ’90s, they would talk about how xyz.com, whatever the company was, reported earnings after the market closed, and it’s trading up 15%. I actually had clients that would call me and they’re like, “Can we buy shares of that in the after market?”

At the time … I’m not talking about presently, but at the time, a lot of trades that took place in the after market or pre-market were considered matched sales. Think about that. Matched sales. So you want to sell 1,000 shares of XYZ at $71.25. No such thing as a market order. You want to sell your shares at $71.25. There has to be a buyer at that price, and if it doesn’t happen, no match. No sale. I’m not sure if that’s the way things are posted now, but that’s how the Wild West began. Think about if you had someone on the other end who you knew who was interested in buying what you were selling.