You hear us say it over and over.
But let’s do it one more time: Don’t follow the news follow the big money.
Today’s post will focus on what we think are the 2 most important themes to investors:
- Follow the Big Money for near-term market insights
- Use it to find the best stocks out there.
Years ago, we saw the power of Big Money on Wall Street. We noticed how stocks were forced to follow the order-flow. That means for example, if a big institution was buying a ton of stock, it usually went up.
That’s what we’re looking for in thousands of stocks every day: patterns. We’re following the Big Money footprints on a large scale.
It’s simple supply and demand but it’s hidden deep in the trading patterns of thousands of stocks.
But inside all that data are the glorious handful of outlier stocks. Those are the stocks with great fundamentals that attract more and more Big Money year after year. Those companies also tend to have amazing businesses: unique leadership with strong sales and earnings growth.
Many times we’ve quoted an amazing study that proved just 4% of stocks are responsible for all of the market’s gains above treasury bills…going back to 1926.
I’m going to let you in on a secret: the stock market game is skewed to the upside!
But whether you’re a near-term market trader or long-term stock investor, our Big Money analysis will clue you into the market’s trend…and the best stocks out there.
For starters, where’s the Big Money headed now?
Don’t Follow the News Follow the Big Money Index
There’s always enough market headlines to make your head spin. Inflation fears, interest rate fears, tapering…you name it. And generally according to the news, there’s no good reason to own stocks.
In the words of Ferris Bueller- I’ve said it before and I’ll say it again: Don’t follow the news follow the Big Money Index.
And the BMI is not falling: (members can monitor it in real-time here):
As a reminder, the BMI tracks all big buying and selling of stocks on a 25-day moving average. If the index is rising, expect markets to head higher.
That’s been our observation for weeks: buying has been increasing.
So, are we surprised to see the S&P 500 and NASDAQ 100 make new all-time highs? Not at all.
Let me say it again: Don’t follow the news follow the Big Money.
And we can see the daily Big Money Stock Buys & Sells chart tells the same story. Buyers are in charge of the market right now:
Those are the individual daily buys and sells that make up the Big Money Index. Follow the juice!
Now what about ETFs? It’s the same story:
Buyers outnumber sellers, pointing to more upside for stocks. Our data-based perspective hasn’t changed: it says stay long.
Look, sellers will show-up one day…but, not today.
That brings us to part 2 of today’s post: Focus on outlier stocks.
Outlier Stocks Attract the Most Big Money
Focusing on the market’s every move may seem cool. But to us, finding an outlier stock is way cooler. They have the power to make investors insanely wealthy.
And the hallmark characteristic they all share is tons of Big Money buy signals. So, while our data shows lots of buyers in many stocks the last month, there’s a few stocks worthy of extra analysis.
That’s where we spend nearly all of our focus. Outlier stocks do one thing especially well over time, they tend to go UP. And oddly enough, often that’s even in the face of scary headlines.
Don’t follow the news, follow the Big Money. And where are the best Big Money stocks found? On our Top 20 report.
Below is an example of a well-known outlier: Alphabet Inc. (GOOGL). (MAP founders own GOOGL in personal and managed accounts)
All of those green bars are when it appeared on our Top 20 lists:
That’s the power of Big Money. Don’t fight that wave…surf it, dudes and dudettes!
So, while it’s natural to worry when it comes to investing, don’t miss the bigger picture. There are companies out there that are going a lot higher in the years to come regardless of what the news says.
As we like to say: if you’re lucky enough to own an outlier stock, you’re lucky enough.
Let’s wrap this all up.
Here’s the bottom line: Our data says stocks are heading higher. Outlier stocks are breaking out which means the cream is rising to the top. When that story changes, you might think we’ll worry then, but we won’t. Because in the long run- outliers don’t care about news.
Headlines are there to spook investors and sell advertising, not make them money. So put the following words down on a sticky note and save yourself some anguish.
Don’t follow the news follow the Big Money!
Jason and Luke show why betting on outlier stocks is a winning recipe.