YoU cAn'T TiME tHe MaRkEt

The magical world of SEC filings ⏳

YoU cAn'T TiME tHe MaRkEt

Let's talk about my favourite topic, SEC filings.

Companies have to report a bunch of stuff, as per rules laid out by the SEC. They have to give literal dates where important events are happening. In other words, they have to tell you what time the market is going to move.

Here's two of my fav strategies related to that.

Strat 1: Insider selling

Let's start with Nikola, my most beloved stock to trade in 2020. In short, Nikola is a proven scam. There's no way to understate that. Everything about it is a scam. Nothing about it is not a scam.

They went public via SPAC, and part of their SEC filings was disclosing when all the insiders would be allowed to sell. They were all allowed to sell on the same date in December 2020, that fateful month. The sheer number of shares they had to sell eclipsed any single day's trading volume, even though it was a hotly traded stock. The insiders had also made their selling intentions somewhat evident. There was literally no way this stock wasn't going to go down that day.

And go down it did, from about $35 to $17 in a couple days. And right on cue, too. Who could've predicted?

Strat 2: Reverse stock splits

You may have heard of Tesla and Apple doing stock splits because their stock prices got too high and they need to rope in some more young'ns with less cash again.

Well, there's a flip side of that coin - reverse stock splits, for companies whose share price is (typically) falling below a price threshold set by the NYSE/NASDAQ, say, $1.

These companies would get booted off the exchange if they can't uphold the threshold, and unsurprisingly they don't want to get booted off and lose that sweet investor dough. So, one thing they can do to up their share price, is to do the opposite of a stock split, and merge shares together. 5 shares might become 1.

And guess what, they have to report to the SEC when it's going to happen.

So why does it move a stock price? Honestly, I have no idea, but companies tend to release positive news on these days - I guess to try and pump the stock in the face of otherwise bearish news of a stock split? But I don't know why it happens, I can only say that it does.

I used to pre-populate my calendar with these upcoming dates, then I'd sit back and wait.

But hey, apparently timing the market is a fools game.