Pro Investors Do This… Amateurs Don’t
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Editor’s note: Below, our corporate partner Marc Chaikin, who started on Wall Street in 1965 and built the Power Gauge rating system, makes the case for cutting through the noise with a clear process. For 60 years, his rule has been to ignore the noise. Now, he’s breaking it, because TradeSmith’s own Andy and Landon Swan have spent more than $10 million tracking what millions of Americans post online about the things they buy. That data catches demand before Wall Street’s money arrives.
On Tuesday, Oct. 27, at 1 p.m. ET, Marc and the Swans will explain how they combine the two at The Stock Tsunami Event. Attendees will get three free stock ideas: two urgent buys and one even more urgent sell. Keep an eye on your inbox starting tomorrow for details on how to join them. Here’s Marc…
Investing isn’t easy. Don’t let anyone tell you otherwise.
Having access to the most powerful analytical tools available helps – a lot. Great investing requires great data and evidence-based analysis. But there’s something more basic underneath that, too.
It determines, right from the outset, whether or not an investor will find long-term success in the markets. And it’s frustratingly simple.
I’m talking about having a process.
Seriously, every successful investor has a process. None of these big shots just shoot from the hip.
Sure, on TV, these high-profile investors might come across as cavalier. But don’t let that fool you… they all have a process. Having a repeatable process is simply the way to be successful on Wall Street.
I know, I know — this might sound painfully obvious. Or it might sound like a Yogi Berra truism. But I can’t count the number of times I’ve talked to individual investors who have little to no process. It’s shocking, really.
Think about it…
Most everyday investors have goals. And some even have a general workflow. Despite that, the majority of the folks I’ve come across just kind of “poke around for opportunities.”
The truth about great investing is that it’s tedious…
In fact, it’s so tedious that most mom-and-pop investors simply can’t keep up with it. I don’t blame them. It’s a monumental task.
Be honest… Do you have a defined exit strategy for every stock you own? Is it written down? And is it more than just saying, “I’ll take gains when it feels right”?
Even after you decide all of that, you have to deal with a flood of information for every stock in your portfolio. The world doesn’t stop when you buy a stock.
What about earnings reports? Do you take those into account? How about insider activity or expert analyst ratings?
We’ve just scratched the surface. And I bet it already feels overwhelming.
Even if your investing strategy is technical in nature (meaning it’s based on the price action of the stock instead of business fundamentals), you’re still confronted with mountains of information.
Unless you love spreadsheets, it’s probably too much. And most mom-and-pop investors end up making compromises. They rationalize “gut feeling” decision-making.
That might work occasionally. But it’s not a path to consistent success. Again, the foundation of reliable success on Wall Street is having a process…
This is why I developed the Power Gauge system.
As regular PowerFeed readers know, the Power Gauge crunches data on 20 individual factors. And it puts out clear and actionable recommendations based on those factors.
In other words, the Power Gauge has a process built into it.
Imagine that a friend turns you on to a small-cap stock. It’s getting almost no attention from analysts. But the story he tells you about it sounds great.
You want to invest. And you’re about to click “buy.” But then, you notice the company reports earnings in just a week or two.
If you’re like me, just thinking about taking a big hit on an earnings play makes your stomach turn. Your friend made the stock sound like a great opportunity. But you don’t want to lose your shirt.
So what’s your process? How do you evaluate a situation like this?
Our Power Gauge makes sure you have industry-leading quantitative tools at your side. You can enter the ticker and get an instant reading. This rating takes the company’s earnings trend into account and will put you ahead of the crowd when making decisions.
You don’t have to use the Power Gauge to succeed in investing. But I know where many individual investors suffer.
The real challenge is having a process for owning great ideas – and for knowing what to do as things change.
The Power Gauge solves that problem. But even if this tool isn’t for you, make sure you have a process when investing.
Understand why you’re buying. And know what you’ll do if and when things change. Have a plan for when you’ll sell, and stick to it.
If you can do those things, you’ll be a much more successful long-term investor.
Good investing,
Marc Chaikin
P.S. If you’re new to Andy and Landon Swan’s work, now’s a good time to get acquainted. The brothers founded LikeFolio in 2013 and partnered with TradeSmith in 2019. Their LikeFolio software turns millions of online posts into demand and sentiment readings, which show when shoppers start buying more of a company’s products before it shows up in an earnings report. Their MegaTrends research puts those readings to work for everyday investors.
Starting tomorrow, we’ll show you how their consumer data and Marc’s Power Gauge work together, leading up to The Stock Tsunami Event on Tuesday, Oct. 27, at 1 p.m. ET. Keep an eye on your inbox for the details.