How to Ride the Biggest Stock Waves for the Biggest Profits I grew up in Florida, and after years away in New York and Europe, I returned here to my home state when I left the Wall Street grind.
That does not make me a surfer, despite Floridaâs reputation for good waves. You wonât find me out on the ocean over Thanksgiving waiting for âthe big one.â
Kelly Slater, regarded as the best professional surfer of all time, was always hunting for the perfect wave. Some statisticians say that the odds of actually hitting and riding that wave is one in 10 million.
Didnât matter. He spent countless hours searching for it anyway, always learning what to look for and what conditions are most likely to produce those gorgeous waves. Whether he ever found the perfect one or not, he rode some of the best waves in the world to incredible success.
Heâs also a millionaire many times over.
I donât search for ocean waves to ride, but I do spend countless hours hunting for âperfectâ stocks whose waves I can ride to big profits.
Here again, odds say I canât find them. But after years of experience, research, data analysis, writing algorithms, and creating the Quantum Edge stock-picking system, the data says I can.
Thatâs how one model strategy in my system beat the S&P 500 by 7-to-1 since 1990.
This is the time to be investing in these big stock waves, because â to stay with water analogies â we also have a rising tide thatâs lifting âall boats.â Itâs an opportunity to accelerate your retirement savings or any other big financial goal.
The market tide is rising. Stocks are lifting. You can soar higher and make more money riding the biggest waves. The Tide Will Keep Rising The S&P 500 has already gained 25% this year â 2.5 times more than the historical average with one more historically strong month to go.
Fortunately, that tide set to keep rising.
Simply put, data points to more moneymaking opportunities ahead. Here are a few of the key data points:
1. Stocks soared after Donald Trump was elected president the first time in 2016. Tech stocks and small-cap stocks were the biggest winners â the gray and green bars below.
2. Wall Street sees a Trump administration favoring things it likes. Big investors generally consider Trump supporting small businesses, lower taxes, less regulation, and lower interest rates.
3. A âred sweepâ is historically bullish for stocks. Republicans will control the House, Senate, and White House. Politics completely aside, this setup is good for stocks. Going back 90 years to 1933, the S&P 500 gains 12.9% on average the following year â about 30% more than the annual average.
4. Interest rates should continue to fall. This is especially positive for small-cap stocks, as those companies typically need to borrow money to fuel growth. As financing costs decrease, that savings falls to the bottom line. And a growing bottom line usually means rising share prices.
5. Record amounts of cash will look for bigger returns. Not only do debt payments decrease when rates fall, but so do returns in money market and other cash accounts. According to the Federal Reserve, a record $6.5 trillion sits in money market accounts (not counting other cash accounts), and itâs already earning less than it did just a couple of months ago.
To profit from this rising tide, you could plop your money in an index fund and forget about it. In fact, Warren Buffet advises it for everyday investors because he says itâs very hard to beat the market.
And heâs right. In fact, according to the website Stock Analysis, 97% of professional money managers fail to beat the market over 10 years.
Thatâs honestly frightening.
But if you could beat the market, why the heck wouldnât you?
Itâs not easy, but it is possible. Probable even. My Quantum Edge system has beaten the S&P 500 7-to-1 since 1990, and thatâs possible only if you surf the big waves created by the best stocks with Big Money flowing in. Zooming In on the Best Stocks Professor Hendrik Bessembinder at Arizona State University proved that a mere 4% of stocks accounted for the entire net gain of stocks over bonds in the last 100 years.
Astounding, isnât it? To invest in stocks and earn more than bonds, you need to find those exceedingly rare stocks that produce the biggest gains.
Thatâs where we as investors want to live. And itâs why I devote my time to identifying those stocks â hunting for that elusive 4% that swell into âperfect waves.â
My system analyzes 6,000 stocks every day, and it has the ability to identify the ones most likely to provide the biggest thrills â and profits. It scores and ranks those stocks, then searches for those with the highest ratings that also have unusually big inflows of institutional money.
Hereâs an example of how it works using current market conditions:
Letâs start with stocks that are surging right now. Financials have been the biggest winners since the election, with Big Money creating waves of inflows.
The S&P500 Select Sector Financials ETF (XLF) has vaulted 44% over the past year, including 9% Election Day onward. Those green bars on the chart below are Big Money buy signals â unusual buying activity that shows the biggest investors on the planet are at work.
Source: MAPsignals.com Ironically, I generally avoid financial stocks. They usually require lots of leverage in the form of debt. Like most anything, debt can be a tool of wonder or destruction â sometimes even both â so I generally stay away from it with potential new investments.
Hereâs how we zero in on our wave. When we screen for the highest-ranking stocks with Quantum Scores of 70 or above, weâve already eliminated most stocks in the market and are left with roughly 1,000 possibilities.
Bearing in mind what I just said about debt, I can then eliminate companies with high debt-to-equity ratios above 60%. That gets me down to 540 stocks.
I also filter out illiquid stocks because they are just too risky to invest in.
That leaves a list of 93 stocks that meet our criteria. From there, I dive down into each stockâs fundamentals, technicals, and Big Money inflows to arrive at those most likely to generate significant profits over time.
Hereâs an example: Visa (V) ranked 32nd out of those 93.
Itâs not at the top of the list, but it is in the top third. Visa is a high-quality company with an excellent Quantum Score of 75.9, which puts it in our buy preferred zone between 70 and 85. The fundamentals are technicals are also both strong.
Source: Quantum Edge Pro I like Visaâs business model a lot. The company has a constant stream of earnings that grows as the economy grows. Itâs what I call a âtoll takerâ business that collects fees from millions and billions of transactions. Odds are you have Visa in your wallet right now â either physically or digitally.
I strongly considered recommending V in TradeSmith Investment Report. In the end, I preferred another financial company with a higher fundamental rating with more Big Money inflows.
Still, V rates a buy in my system, and I expect the stock will do well in the coming years. Ultimately, we want to zoom in on the absolute best-of-the-best stocks. These give us the highest probability of making money.
Our portfolios in both TradeSmith Investment Report and Quantum Edge Pro recently boasted an 87.5% win rate on open trades, with the profits larger than the losses.
This is the recipe for long-term success over time. Itâs how beating the market goes from impossible to probable. Itâs finding those rare âperfectâ waves.
A rising economic and stock market tide is lifting stocks. Identifying those set to rise the highest and endure the longest is how you beat the market and growth your wealth when so many others continue to struggle.
Talk soon, Jason Bodner
Editor, Jason Bodnerâs Power Trends
P.S. Speaking of Big Money waves, I recently told you about my colleague Jonathan Rose, who worked on the floor of the Chicago Board Options Exchange. He also helped institutional investors execute their trades.
I just want to remind you about his special edition of Masters in Trading Live tomorrow morning (Nov. 26) at 11 a.m. Eastern time. Heâll unveil his new 5-step options strategy for quick-hit options trades.
You can register now by clicking here on this special link.
As Jonathan says, he wants to make sure anyone whoâs interested has a chance to gain the knowledge to beat the smart money at its own game.
Itâs free to attend. All you have to do is reserve your spot now by clicking on this link, and youâll receive all the necessary details. | 