There's nothing wrong with betting on the next direction of a stock, or the market in general. But let's be responsible about admitting that we're wrong, when we get it wrong.
Regardless of your strategy, whether it's technical, fundamental, economics or even if you base your analysis on the movements of the stars and the moons, it all comes down to risk management.
How good are you about admitting that you got it wrong and moving on? If you suck at it, then you're not going to do very well and you'll be gone soon. That's economic Darwinism at it's finest.
The ones who are the best at admitting they were incorrect in their assessment, and doing so the fastest, are the ones who make (and keep) the most money over time.
It's really that simple.
How do you lose weight? Eat less and workout more. Duh.
But cupcakes and pizza are delicious.
Just like admitting we're wrong is very difficult for us. It's one of the hardest things for humans to do.
In a further effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: "The Minor Leaguers."
We write a post every other week where we outline some of our favorite setups from the watchlist.
We've already had some great trades from this universe and couldn't be happier about the early feedback.
Moving forward, we'll be rotating this column with "Under The Hood" each week.
In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.
Then, we simply sort the stocks by their percentage from new highs. Easy done.
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
Leadership in this environment is stretching far and wide.
We're seeing a growing number of industry groups and areas not only making new highs but also outperforming and offering us more and more avenues to express our bullish thesis on stocks and risk assets in general.
The point is, with such an overwhelming amount of leadership these days, we can be picky and place our bets on only the best of the best in each group.
In today's post, we'll explore a hot new growth industry we haven't covered in much detail yet - Autonomous Vehicles.
Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.
Dividend aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to longer-term minded shareholders.
As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.
Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for 5-9 years.
Introducing the Young Aristocrats. We like to say these are “stocks that pay you to make money”. Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
Forget the hedge funds. You want to crush the suits?
Well, they still make sell side analysts wear suits and come into the office.
It's wild, I know.
Sell side analysts have worse herd behavior habits than your average investor. They have their cushy jobs (a few of them still do anyway). They get to tell their friends and family that they work on wall street, because some people still think that's "cool".
But the truth is, it's our job to take advantage of them. It's a lonely and dying business and they're not having any fun. In fact, they're finding it really difficult to run their antiquated valuation models on today's business. It's hilarious to watch them try.
Now, making fun of the situation doesn't get us paid. BUT, taking advantage of their conflicts of interest certainly can, if done correctly.
You see, they have families, kids in private school, expensive mortgages and used to nice vacations. It's a lifestyle. Their wives don't work and it's up to daddy to make sure the big check comes home every month, regardless of the cost.
The universe comprises several solar systems- big and small. Similarly, the market comprises of several conglomerates- big and small. One such conglomerate that we'd like to look at today is the Adani Group.
It is fit to call the Adani Group a solar system since there have been times in the past when these stocks have rallied despite a broader market correction. So where are these stocks headed and what is our view of the constituents of this group going forward?
Let's take a look at the charts.
We created an equally weighted custom index of the Adani Group constituents. It takes one cursory glance at this chart to see that this group has been on a tear since the dip in March 2020. With only minor corrections halting these stocks from time to time, the returns generated by this group have been handsome indeed.
We've enjoyed a ton of success with the bottoms-up scans and the columns they've inspired.
We absolutely love our scans! When we combine them with our traditional top-down approach, they make it almost impossible to miss key market themes.
In fact, we've launched four columns around these scans since last year -- and we have many more that we only run internally.
Today, we're sharing one with you. We call it "Fade The Street,"and it's one of my personal favorites.
The scan leverages data from sell-side analysts including their buy/sell ratings and price targets in order to identify stocks with the potential to become the market's next big winners.
How do we do this? Simple...
We scan for top-performing stocks that happen to be some of the most-hated and out-of-favor names on the street. Basically, we're looking for names that analysts have gotten wrong - or at the very least, are trending against their respective ratings.
I was away from the office last week with the team, but I was still able to pop into BNN Bloomberg for a quick hit.
We discussed the fact that fear among investors is off the charts, stocks are in uptrends and breadth is expanding. I think the beginning of the new Commodities Supercycle is bullish for stocks and just another tailwind to take them higher.
If the tv anchors think I'm making a bold call by suggesting that stocks in uptrends will go higher, then we're probably not near a top.
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.
In last week's report, we played "devil's advocate" and laid out some of the more bearish developments we could find out there.
But all-in-all, the market is still providing bears less room to make a sound argument. We continue to find that any bearish evidence is primarily isolated to shorter timeframes... and even then, still overwhelmed by the abundance of bullish data points.
