All Investors Should Heed This Warning

By Jason Bodner

A building or room used for social amusements. Specifically: one used for gambling.

That’s Merriam-Webster’s definition of “casino”…

And “casino” is Warren Buffett’s emerging definition of the stock market.

I agree. And this should scare the pants off investors.

We’d be crazy to ignore one of the most successful investors who ever lived…. Who just happens to be worth $135 billion.

His investment company, Berkshire Hathaway, owns a lot of well-known private companies like Geico, Duracell, Fruit of the Loom, and more. (Talk about diversification.) It also owns big chunks of huge companies like Bank of America (BAC), Apple (AAPL), and Coca-Cola (KO).

Berkshire Hathaway A Shares (BRK.A) are the highest-priced in the world – more than $600,000 per share. You could buy a house (or two) for that price.

If you want to invest alongside Buffett, you can buy “B” shares (BRK.B) that trade for just over $400 – and rate a buy in my system with a 74.1 Quantum Score.

Source: TradeSmith Finance and

We should all heed Buffett’s observation about the market in his latest letter to shareholders, which was just released a week ago today:

Though the stock market is massively larger than it was in our early years [Buffett took control of Berkshire in 1965], today’s active participants are neither more emotionally stable nor better taught than when I was in school. For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.

Whether investors engage in this “casino-like behavior” knowingly or unknowingly, the result is the same: It’s a path to failure. The house always wins in the end.

You don’t have to go down that path. Instead of the odds stacked against you, you can flip them in your favor – and heavily in your favor – to beat the house, the market, your neighbor, and most other investors.

Don’t Rely on Lady Luck

As you probably know, the odds are against you from the moment you walk into a casino, or even place an online sports bet the way you can nowadays.

That doesn’t mean you’ll never come out a big winner. But if you do, it’s because Lady Luck was on your side… and Lady Luck never sticks around for long. (And don’t expect a warm welcome from the casino next time you show up.)

Casinos are in business to make money, of course. They wouldn’t exist otherwise. The only way they can make money is if the house wins more than it loses… which means the rest of us lose more than we win.

If you’re itching to play casino games, Blackjack offers the best chance of success, according to data from the American Gaming Association. You can expect to win 48.5% of the time… but that means you can expect to lose 51.5% of that time.

Don’t even think about keno, where odds are you’ll lose 80% of the time.

If you want the gory details, you can check out the odds of various casino games here at the American Gaming Association. But notice that one game is not on the list: Texas Hold ‘Em.

That’s because Texas Hold ‘Em is actually a game of skill. You can master strategies that shift the odds in your favor.

This is how professional poker players make big money. Bryn Kenney, the all-time money leader in live poker tournaments, hasn’t earned more than $65 million because he’s luckier than the rest of us.

To win at poker or investing, you need an edge to exploit over and over that gives you house-like odds to come out ahead – way ahead – much more often than not.

My preferred edge is data… and it works. How do 70% odds of success sound?

Do Rely on Data

For most investors, investing starts with those unfavorable casino-like odds.

Actually, your chances of outperforming government bonds are even lower than most casino odds, according to renowned Professor Hendrik Bessembinder. He analyzed all 26,000 stocks ever listed in the history of the stock market and found that only 4% of them generated all of the market’s returns above Treasury bills.

In other words, investors have a 96% chance of failing to beat government bonds.

Why not just invest in government bonds then? Well, it’s nearly impossible to achieve financial freedom earning 4% a year, which is the 10-year U.S. Treasury bond’s current yield. But for the last decade, that yield has been lower – mostly below 3%. At that rate, you would need 24 years to double your money.

To make a real difference, you must be in those select few stocks responsible for the outperformance. But how, when only four out of every 100 stocks give you that?

Data. By analyzing the right factors the right way, you can massively increase your odds of success.

That requires screening millions of data points, which is where quantitative analysis and artificial intelligence come in. My Quantum Edge system performs an in-depth analysis of more than 6,000 stocks every single trading day – more 120 fundamental and technical variables per stock.

And those aren’t random variables. They’re proven to be the reliable predictors of future profits.

Many of these variables – especially what Big Money is buying and selling – would be discoverable only by the handful of people who manage the largest order flow information in the world. I was privileged to do that for 14 years earlier in my career, and it led directly to my whole quant stock-picking system and its successes.

Institutions account for 70% to 90% of trading volume each day. This is the Big Money that moves stocks. I know, because I was the middleman on precisely these kinds of orders. It’s essential information to putting the odds in your favor.

Through years of use and back testing, I can count on my system identifying winning investments 70% of the time.

Fortunately, there’s no one single “house” when it comes to investing, or we would put it out of business.

I will forever respect and admire Warren Buffett as the legendary investor and likable man that he is. And he’s absolutely right about how many investors trade. Most end up spinning their wheels or enjoying fleeting success, only to see those odds catch up to them and their profits evaporate.

Save the gambling for recreation. Your hard-earned money and financial future are too important to invest against the odds. Quantitative analytics helps you tip them heavily in our favor.

You can take that to the bank.

Talk soon,

Jason Bodner
Editor, Jason Bodner’s Power Trends

P.S. We’re seeing the fruits of predictive data and quantitative analysis with not just a 70% win rate in TradeSmith Investment Report but a 100% win rate.

I know it won’t last, but it shows you how you get ahead.

All 17 stocks currently in the portfolio are making money, with an average return of 32%.

They all have strong fundamentals and technicals to go with Big Money inflows. And I have my eyes on a new opportunity I expect to release next week. 

Click here to learn how you can access our complete portfolio and put yourself on the path to success with the odds firmly in your favor.