Most investors should be feeling pretty good. The VIX or “fear index” has dropped 30% while the S&P 500 and NASDAQ are up about 6-7%. While I’d love to attribute the gains to Big Tech, with the exception of NVDA they haven’t actually led the way. The real money is being made lower down the Wall Street food chain.
For example, my GameChangers jumped 10.5% this week in the aggregate. That’s including a nightmare trade that took 4 percentage points off our overall score for the period after a bad reaction to so-so earnings . . . but a few strikeouts like that are built into our expectations.
And you can’t hit home runs without swinging at a few bad pitches. One of our stocks soared 50% after earnings. That’s not a misprint. We made 50% on this name in a matter of days. Another is up 32%, a third gave us 25% and beyond that, to be honest, the numbers don’t matter.
This is how you outperform. The “random walk” is good but if you want anything better, you need to be selective and you need to have the courage of your convictions. These stocks were under an interest-rate cloud in the last few months. Nobody wanted them. People were afraid.
Earnings cut right through the fog. These companies are growing faster than Big Tech. And because they’re still priced for something like disaster, they looked cheap compared to Big Tech. Logic suggests that Wall Street needed to buy back into these names and it happened.
We had the three top stocks on Wall Street with market capitalization of $2 billion or more yesterday. From here, I think they continue on their journey. It’s a virtuous circle . . . when things are good, investors get greedy for the extra point. That’s where we are now.
I’m looking forward to it. In the meantime, my 2-Day Traders scored back-to-back wins. On Halloween, when the pre-Fed jitters were at their worst, we made 16% going long on the banks. Simple, contrarian, profitable. Then today, we were in and out against the utilities . . . and earned almost 20% in a matter of hours.
Keep the cash flowing. My High Octane Traders reaped nearly 14% this morning with a simple bet that JPM will trade above $144 at some point in the next five weeks. Here at $143, that looks likely. And as today evolved, Wall Street decided that the biggest bank around has what it takes to nudge another 0.7% beyond that point.
That’s all it took for us to make more money on this trade than the S&P 500 has earned all year. And there’s a lot more where that came from.
What’s the point? Sometimes the random walk is good enough. But sometimes, when your eyes are open, you can aspire to higher goals. It’s possible. We did it this week.