Editor's note: Marc Chaikin has forgotten more about the markets than most folks know... Regular readers know Marc founded our corporate affiliate Chaikin Analytics 15 years ago. But before that, he worked for many decades on Wall Street. In fact, he started in the business before we even landed on the moon. Nowadays, at Chaikin Analytics, Marc shares his nearly six decades of experience with everyday investors. He helps balance the scales between folks like you and the pros. Today's Masters Series is adapted from the June 5 and June 12 issues of Marc's free Chaikin PowerFeed daily e-letter. In the essay, he explains why we shouldn't worry about a "June swoon." And more importantly, he details one key to long-term success for investors...
The Key to Becoming a Great Long-Term Investor By Marc Chaikin, founder, Chaikin Analytics It always tickles me to hear folks on the radio quote daily market numbers... You'll hear something like, "The Dow Jones Industrial Average closed up 37 points yesterday." Or maybe they'll say, "The S&P 500 Index is down 123 points today." I have to wonder... What do everyday people do with this information? Do they know what it means relative to the specific index? I don't think many radio listeners hear "123 points," check the current level of the S&P 500, and figure out what it means in percentage terms. But that type of context matters. Perhaps even crazier, that's the bare minimum amount of context needed. Most folks also don't know what these daily market numbers mean on a broader basis... Does a "down" day mean anything? What about several of them in a row? I've come to realize my years as a "quant" have spoiled me. I've had access to a mountain of data for so long that I'm now awash in market context. For me, a couple points up or down do mean something. That's true even if they don't matter to most folks. I'll show you what I mean today...
| Recommended Links: | |
 A Little-Known AI Currency Soars 10,000% in One Week? A little-known currency has emerged that will power AI. It's not gold, bitcoin, or any other crypto. But this currency is now in such demand that Alphabet, Apple, and Amazon have already gained approval from the federal government to directly buy, sell, and trade it. Elon Musk says: "People just don't understand how much demand there will be." The Financial Times reports that it could become "a new world reserve currency." It's also already making some people wildly rich, soaring as much as 10,000% in a single week. Whitney Tilson traveled to the AI epicenter of the world to investigate. See his full report here. | | |
From 1995 to 2022, the market experienced a sell-off at the end of June after a positive May on 22 occasions. That's out of a possible 28 years over that span. In other words, about 80% of the time, the market experienced what a lot of observers call a "June swoon." And in those 22 instances, the average sell-off from June 19 through June 27 was roughly 1%. So if you hear about the market selling off this month, just know that... It's normal. The real question is, "What happens next?" Here's when being awash in a mountain of market data comes in handy... You probably haven't heard of Wayne Whaley before. But he's one of the countless quants and financial thinkers who I follow. Whaley won the 2010 Charles H. Dow Award. That's a recognition of excellence in the field of technical analysis. To the point of today's essay, Whaley crunched the numbers on the stock market's stretch of so-called June swoons from 1995 to 2022. It's worth paying attention to what he found... You see, after a June swoon, things start looking up. Of the previous 22 times, the S&P 500 produced gains from June 27 to July 23 in 19 instances. That's an 86% success rate. The S&P 500 averaged a gain of more than 2.2% in those instances, too. Remember, we're talking about a broad market index. A 2%-plus move higher after a losing stretch is a big positive change. On their own, it's hard to interpret the market's day-to-day movements. Most regular folks simply don't have the proper context to know what everything means. As I've shown you, it's incredibly common for the end of June to produce a market sell-off. That could happen again in the coming days. But it's OK if it does... History tells us that a June swoon often leads to positive returns over the following month. So don't let it scare you out of the markets right now. Now, let's take things a step further... Great investing requires great data and evidence-based analysis. But there's something more basic underneath that, too... This idea determines, right from the outset, whether 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. Having a repeatable process is simply the way to be successful on Wall Street. 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, most of the folks I've come across just kind of "poke around for opportunities." Great investing is tedious... Do you honestly 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 need 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? I'm just scratching the surface with those questions. 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. Using "gut feeling" decision making 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 my Power Gauge system... 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. The Power Gauge makes sure folks like 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 it 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 issue isn't finding great ideas. Instead, the problem is having a process for owning them – 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. Know what to do if things change. And 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
Editor's note: Marc and his team are leveraging the Power Gauge in a special way today... In short, it's all related to his newest prediction about a huge monetary shift. And it's unfolding right now. That means it's essential for you to start preparing immediately... Marc is going on camera on Wednesday, June 26, at 8 p.m. Eastern time to reveal how you can position yourself to profit for several years from this unique setup. The online event is free to attend. Marc only asks that you save your spot in advance. Learn more here... | 
No comments:
Post a Comment