Research Review: Early Stage Investor

By TradeSmith Research Team

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By Michael Salvatore, Editor, TradeSmith Daily

Last year, virtually any company involved in developing or using A.I. attracted tidal waves of capital.

Problem was, many investors were caught up in fears about inflation, interest rates, and a recession that never came. They sat on the sidelines, paralyzed by fear, until well after the big money was made.

But Luke Lango, editor of Early Stage Investor at our corporate partner InvestorPlace, can’t count himself among them.

To date, Luke has secured several major wins for his subscribers by opportunistically betting on the right A.I. stocks at the right time.

More than that, he’s a voracious researcher and prolific writer who continually keeps his subscribers up to date on what’s happening in the world of A.I., early-stage technology, and markets broadly.

And his take is that there’s plenty more A.I. gains to come — if you know where to look.

I mention this because for the next week or so, InvestorPlace is running a presentation for Early Stage Investor centered around what Luke calls the A.I. Endgame. This “endgame” refers to the advent of Artificial General Intelligence, a breakthrough in A.I. technology that would bring humanlike capabilities to A.I.

If you haven’t already, I suggest checking out this presentation for yourself.

But today, I’m going to share a look at what’s on the other side of that presentation: an Early Stage Investor subscription.

Early Stage Investor is a beast of an investment resource. If I were to cover every aspect of what you get in just one week as an Early Stage Investor subscriber, this issue would be about three times as long as the longest piece I’ve ever sent you.

So today, I’ll share some highlights… And I’ll also share a look at the service’s overall track record.

It’s my hope that doing reviews like this will help highlight some of the best subscriptions in the business… and let you know exactly what to expect if you decide to join.

Early Stage Investor in Review

Let’s start on one of the most value-packed elements of Early Stage Investor, the Daily Notes.

This regular, in-depth research report goes over the broad market conditions, a few technical and fundamental highlights, portfolio updates, and more.

For example, here’s Luke leading off in Wednesday’s Daily Notes about the inflation-related selloff the day before:

With respect to today’s inflation report, it really wasn’t that bad at all. In fact, it was pretty good. Inflation dropped from 3.4% in December to 3.1% in January. So what if it dropped less than expected? It’s still dropping and is darn close to 2%.

And, as we’ve noted before, the inflation fight excluding housing costs is over. Excluding shelter, inflation rose just 1.5% in January. Inflation ex housing has been running below 2% for several months now. Outside of housing, inflation is dead.

Sure, shelter inflation is still running at 6%. But that’s falling, too, and leading indicators suggest it will keep falling towards 3% or lower over the next 12 months. Big picture: The general trend for the U.S. economy remains disinflation. This inflation report does not change that.

Which only further means that today’s stock market sell-off is simply a golden buying opportunity in smaller tech stocks ahead of the A.I. Endgame.

And in a Daily Note from Thursday, these two bullets stuck out to me as a valuable and balanced piece of analysis on underlying market technicals and valuations:
  • Technicals: bullish. Technical trends in the stock market are bullish. The stock market has bounced back very nicely from its post-CPI sell-off on Tuesday, and technical trends look very bullish. We think this is a market that is technically ripe to keep rallying.

  • Valuation: bearish. The valuation outlook for stocks remains bearish. Treasury yields stabilized today, but stocks moved higher on the back of multiple expansion, so the Equity Risk Premium stayed below zero. So long as earnings yields are below Treasury yields, the valuation outlook on stocks will remain bearish.

What follows is a quick-hit update on a number of portfolio positions, which I won’t share here out of respect for current subscribers. But as a subscriber, you can expect three to five bullets on stocks Luke recommends — things like major news developments, analyst coverage, or price action.

Let’s keep rolling right into the longform research reports, a place that seriously impressed me.

Since the second half of December, Early Stage Investor has published six individual research reports. These cover everything from Luke’s top investment themes for 2024, to a massive and in-depth overview of where A.I. technology is at now and where it’s headed, to several reports with recommendations for individual companies Luke recommends to take advantage of the trend.

On that latter count, one report recommends three stocks participating in the A.I. health care trend we featured last weekend… five A.I. stocks Luke believes are set to 10x over the long haul… seven A.I. stock “moonshots” with, as Luke puts it, 100x potential… and for the options traders with a stomach for a little more risk, three long-dated call options trades on the A.I. theme.

So all told, when you sign up today, you’re getting 18 thoroughly researched recommendations on investments in the A.I. space. That’s enough to build a robust and multifaceted portfolio on this theme — almost like an A.I. ETF.

I have to call out one thing I especially admire about the options report. Luke does not mince words about the risk associated with options, which have the potential to produce substantial gains, while also presenting the substantial risks of losing most or all of your investment:

For investors who are willing to put some additional risk on the table — and who truly believe in the A.I. Endgame thesis — now is finally a good time to consider options. In particular, long-term equity anticipation securities, or “LEAPS.”

As noted above, we have very high conviction in the broadening out of the A.I. Revolution. And so, we want to add some leverage via long-call exposure to the portfolio to potentially benefit from this pivotal moment.

To be clear: We can’t tell you if you are in a position to trade options. That is a decision that must be made by you and your broker based on several factors. We recommend you contact your broker if you have questions about the risks and characteristics of stock options, as these can be somewhat complicated products.

We will say, however, that options are not for your lunch money. They are risky and should be treated as such.

I appreciate Luke’s candor here. Options, while a fantastic trading tool in the right hands, are not for everyone. And they require a bit of know-how to get going. Knowing to communicate that ahead of the three recommendations instills a great sense of trust that Luke respects each reader’s individual risk tolerance.

Finally, let’s talk about the track record.

Going back to 2018, Early Stage Investor has had 177 trades enter its model portfolio. Of those positions that were closed, wins and losses, the average return is more than 45%. Counting just the winning positions, the gain is 141%. The average hold time is 696 days, or just under two years.

That’s not to say there are no losses. Losses in early stage tech are to be expected. But overall, Luke’s portfolio has made much more money than it’s ever lost. And when you’re investing in the space he does, that’s commendable. It’s a volatile place where things can, and do, turn on a dime.

Only you can decide ultimately if a newsletter like Early Stage Investor is right for you. But from everything I’ve seen, it’s one of the best long-term-focused speculative strategies I’ve ever seen.

What sets it apart is how Luke so consistently speaks to his subscribers through the Daily Notes, regular video updates, and deliberate position management. The overall quality and depth of the research is high, too, giving you plenty to “geek out” on should you want to.

I invite you to check out Luke’s recent presentation on the A.I. Endgame and Early Stage Investor and draw your own conclusions from it. And I hope you’ve found this look into the newsletter itself useful.

To your health and wealth,

Michael Salvatore
Editor, TradeSmith Daily