The road to investing riches is paved with two things: things we know and things we don’t know.
What we don’t know is how the market is going to act tomorrow. At MAPsignals, we use data to guide us. That allows us to get it right more than wrong.
What we do know, however, is that outliers keep going up over long periods. Our data spots these stocks with ease.
So, even when markets act irrationally, like seemingly being overbought forever…as long as we keep focusing on the knowns (outlier stocks), the unknowns (market movements) take care of themselves eventually.
The road to investing riches is rather simple if you follow the big money. The best stocks out there aren’t flukes. They may be the needle in the haystack, but they are big money favorites.
When markets race to the moon, like now, outliers can make you insanely rich.
The game is actually easy once you get it: don’t get cute, don’t make it complicated.
Focus on outlier stocks. Rinse and repeat.
Big Money Index Breaks A Record
Sometimes the market is pretty predictable; other times it isn’t. For instance, we’ve seen extreme overbought markets before, but never to this extent.
But again, that’s ok- because the road to investing riches is paved with outlier stocks regardless of the market environment.
Unknowns are part of the game. The key is to know where to focus.
So, how long will we stay overbought? Only time will tell, but we do know that we will shatter the longstanding (since the early 1990s) overbought record. The record is 65 trading days and we are at 64 today.
When the Big Money Index pulled back in June (as predicted), the momentary market dip was bought instantly. At risk of stating the obvious, we are in an extremely bullish market.
While this can be frustrating for many, it’s endearing for long-term investors: they are making a lot of money.
But if you’re still focused on why we are staying overbought for a record time, it’s simple: there are no sellers.
Selling In Stocks Is Zero
After you trade billions of dollars in stocks for a living, you learn a thing or two. We collectively spent nearly three decades handling the largest order flow on Wall Street.
We learned that stocks move because of supply and demand.
Right now, there is hardly any supply.
Below are Big Money Sell Indexes for sectors. When the red line is increasing, selling is increasing. As you can see, selling in stocks is effectively zero.
When there is no supply, stocks and markets zoom higher. You can see a flat-line in selling in sectors.
So, now that we know why markets are staying overbought for so long, we can stop focusing on it.
How can we as investors make big bags of cash?
Now it’s time to focus on outliers.
Outlier Stocks – The Road To Investing Riches
When you follow the big money, they often lead to the outliers. If we turn that around, outliers constantly see big money activity. That’s the hallmark trait. We know the outliers because the big money points them out over and over again.
At MAPsignals, we showcase a weekly Top 20 list. These are our best stocks seeing big money activity. This is where the outliers are found year in and year out.
Take a look at SolarEdge Technologies, Inc. (SEDG). It’s up over 1200% since it’s first Top 20 appearance on 4/10/17. But, check this out – since then, it’s been a Top 20 stock 36 times.
Let’s do another one, Trade Desk, Inc. (TTD). It was profiled as a top 20 name on 5/16/17. Since then it’s up 850%. But more importantly, it’s been a top name 33 times since.
The funny thing is, when you know an outlier, you’ll tell everyone! Here’s a video of me touting the big money phenomenon of TTD back in February of 2019. I said to expect a double. Most of the comments suggested I was foolish for picking such a parabolic stock.
Well I got more than my double. Since 2/25/19 the stock is +150%.
Here’s another one, Paycom Software, Inc. (PAYC).
It was profiled on 2/14/17 and is up 478% since. And it’s been a top 20 stock 43 times.
Bottom line -hopefully by now you see a pattern. The best stocks out there march higher year after year regardless of what the market does.
When you see big money racing into a stock – don’t fight it, invite it.
So, while most people focus on what the market will do, whether we will crash or go up forever, the focus should be elsewhere. Timing the market frustrates most people.
If that’s your thing- fine. Some people actually enjoy being frustrated.
I say, “Go for it! Do what makes you happy.”
But focusing on outliers is how you get rich along the way.