Dad used to say, “defense wins championships.” Regarding football, he was right.
But when it comes to stocks, defense won’t win investing championships.
The game of football is a slugfest. Great defense consists of stopping the run, rushing the passer, and breaking up the play. Get the quarterback out of rhythm and momentum shifts on a dime.
There’s a lot of strategy when it comes to the game of pigskin. When it comes to investing, though – those with longer time horizons should focus on offense…not defense.
By that I mean, aim to find outlier stocks. Those are the companies that dominate their field of play. And as you can imagine, their charts go up and to the right year after year.
I’m talking about the Apples and Amazon’s of the world. Finding them isn’t easy. Holding them for life-changing gains, well that isn’t easy either.
Playing defense won’t win investing championships. Strapping on the helmet and buying a handful of great stocks is how you prevail.
That’s where MAPsignals excels. Our unique system is predicated on following the Big Money. Those are the smartest investors out there. We’ve learned that they control the ball.
They leave cleat-prints. We follow. That’s our edge…more on that in a bit.
Now, as it relates to stocks today, there’s a lot of offensive action going on. Markets are flying high. Our data points to more highs into yearend…let’s get to that now.
Big Money Index Is Trending Higher
Markets have been in risk-on mode for months. You can see that in our trusty Big Money Index. It measures the flow of Big Money going in and out of stocks.
There’s only been one stance to be lately and that’s bullish:
As you can see above, when the BMI gains momentum to the upside, markets rally. We’ve been beating the bull drum for months. And our stance hasn’t changed because playing defense won’t win investing championships.
Let’s keep drilling down further at the daily stock action. Below is the daily Big Money Stock Buys & Sells chart. When buying grows and selling slows, markets zoom.
I’ve outlined what’s important to me the last few weeks:
Folks, this is what’s keeping stocks afloat. Demand has been growing for stocks.
And it’s not just all stocks. The high-quality growth kind are racing higher. The sectors seeing offensive action have been growth-heavy.
Like Discretionary – below are the daily buys and sells for the discretionary sector:
And now look at Technology stocks. Holy moly that’s healthy buying:
When our data picks up on big robust buying in stocks, it’s like a loud foghorn…BE OFFENSIVE!
We don’t have to worry about headlines…we just follow the flow of Big Money. And that leads me to why playing defense won’t win investing championships.
Defense Won’t Win Investing Championships
I study our data daily. And while it can clue us into short-term moves (like above) …the real power lies in the ability to find outlier stocks.
They are the game-changers.
And on a short-term basis, when our data says to be bullish, they can handily beat the market. The below charts are made from our portal, available to platinum subscribers.
To show you what I mean, below is a basket of the 5 stocks getting the most buy signals from July and August.
Look how beginning on September 1st to today, those stocks more than doubled the S&P 500 (SPY ETF). Our stocks gained +8.18% vs. SPY’s +3.95%:
That’s impressive! But, let’s go back even further…we’ve learned to stay offensive with great stocks.
Here’s our Top 5 stocks getting Big Money love from 7/1/17 – 12/31/2017. Again, the idea is that Big Money favorites will keep ramping. And boy did they!
These 5 stocks gained +173.2% vs. +86.13% for SPY:
That’s amazing! But, I’m going to drive home the point one more time.
Let’s rewind the tape even more. Below are the Top 5 stocks from 7/1/2015 – 12/31/2015. Taking a bet on them starting 1/1/2016 returned an eye-popping +858.45% vs. 155.52% for SPY:
There’s only one word for that kind of outperformance: Glorious! This last chart proves that playing defense doesn’t win investing championships.
That’s insane juice! (Leave me a comment with your guesses on which stocks these are!)
Let’s wrap this up.
Here’s the bottom line: Defense wins championships when it comes to football… not so much with investing. Be offensive. Playing defense won’t win investing championships when it comes to outlier stocks.
Lean in.
It only takes a couple great stocks to transform a portfolio. If you’re ready to up your game, start a MAPsignals subscription today.
Finally, if you want to see more, check out my latest video: Best Growth Stocks for December 2021. Let’s just say that these stocks make me “SMILE.”
Make sure to follow our YouTube channel here so you never miss any of our videos.
Lucas is co-founder of MAPsignals. His full bio can be found here.
Prior to MAP, he was Head of ETF Sales at Cantor Fitzgerald & SVP of Derivatives at Jefferies, LLC.
Bulls Have A Trail To Blaze
Hi Luke
I have been looking at different hedge funds performance. On an annualized basis, they all seem to average in around 30-35 % returns. Why is it so difficult to make anything more than this magic number? Why can’t I just buy TQQQ and leave it there?
Hey Alex –
That’s a great question and there isn’t one simple answer. But, hedge funds use leverage – that means they can have positions larger than their cash balance. That is one way they can achieve 30+%…which by the way is incredible performance year after year. Very few funds can do that.
As far as TQQQ – this is a leveraged fund that can work well in a non-volatile market. This instrument is not for long-term investing, but rather a daily performance of 3X its benchmark. Be careful with these funds because in a choppy tape, they can underperform drastically.
Thanks for the reply. I have also seen some financial advisors using an options overlay, where they have SPY+QQQ+TQQQ plus options.
If I understand the MAPS process, you are picking outlier stocks and buying them with a view of keeping them forever. How do you determine when to buy i.e. the price? And do you keep a trailing stop loss? After all, not all companies will keep going up and up and up forever, right?
Every portfolio manager is different – but I could see some doing an overlay for extra exposure.
MAP looks at stocks getting Big Money action in the shares. Then we rank all of those stocks with a score from 1 – 100. The top stocks have 3 traits: Big Money + great fundamentals + great technicals. From there we dive in and learn about the company: does it have a great business? What about competitive moat? Profits…etc.
The great stocks have high scores on those 3 traits. When you buy is up to you. But, we consider a stock for entry when it’s on the Top 20 list. And of course we showcase 1 stock a week to our Silver and Gold subscribers. And that stock has a closing trailing stop loss attached for those concerned with risk management.
As far as holding them forever, that’s what we try and do in our personal accounts. I mean, when was the best time to sell out of AMZN? Likely never…
mc Hi, Luke , i wish you provide list all recommended stocks in MAP 20, and their performance since they are recommended at on yearly basis for convenience of your customers.when you list only list few socks and their performance in one month, that does not provide over all performance of all recommended stocks over a period of one year.you could maintain a sample portfolio all recommended stocks would be a great help for your customers .I HOPE YOU CONSIDER MY HUMBLE REQUEST.Thanks,mcreddy.
Thanks for the feedback McReddy –
we will be adding this functionality in the portal. We know many have requested the ability to get performance results of all stocks…we’ll get there!
Can I use MAPS signal to build my own investment portfolio DIY style? I know you guys are not RIAs.
Hey Elena –
Yes, many of our subscribers create their own portfolios and use our data as an overlay to their process. Sometimes investors have stocks on their radar and they will screen them in our portal, etc.