Succinct Summation of Week’s Events 4.12.19
Succinct Summations for the week ending April 11th, 2019
Positives:
1. Markets continued to act better in light of IPOs, Disney streaming news
2. Jobless claims fell 8k w/o/w, from 204k to 196k.
3. PPI-FD rose 0.6% m/o/m, above the 0.4% expected increase.
4. CPI rose 0.4%, above the 0.3% expected increase.
5. Same store sales rose 4.8% w/o/w, greater than previous 4.4 increase.
6. NFIB said something meaningless about small business optimism that everyone ignored.
Negatives:
1. Mud-wrestling Barr/Mueller report + POTUS taxes means its going to be a long hot summer;
2. Job openings fell 7.1% m/o/m, from 7.625M to 7.087M.
3. Home mortgage apps rose 1.0% w/o/w, decelerating from previous 3.0% increase.
4. Factory orders fell 0.5% m/o/m following a revised no change in January.
5. Consumer sentiment is currently at 96.9 for April, below the expected 98.
6. Crude oil inventories rose 7.0M barrels w/o/w to 456.6M.
Thanks, Matt!
4-7-19 Wall Street Insider: The No. 1 Reason Why You Can’t Beat the Market - Palm Beach Research Group
Wall Street Insider: The
No. 1 Reason Why You Can’t Beat the Market
By Nick Rokke April 5, 2019 -- Palm Beach Research
Nick’s Note: A new study from financial research firm DALBAR
recently crossed my desk. It found that the average individual investor lost
twice as much as the S&P 500 in 2018: While the market was down 4.4%, the
ordinary Joe lost 9.4%. That’s striking underperformance…
And to find out the reason behind it, I reached out to our Wall
Street insider, Jason Bodner—who spent years as a top trader for Wall Street
firms like Cantor Fitzgerald.
Jason has experience beating the market at its own game. Right
now, his Palm Beach Traderportfolio is up 22.5% since January 1. That bests the benchmark
S&P 500, which is up only 14.4% since then. So what’s his secret? Read on
to find out…
By Nick Rokke, analyst, The
Palm Beach Daily
Nick: Hi, Jason. A recent study found that average investors
consistently underperform the broad market. Why’s that?
Jason: There are lots of reasons… But the main
one is that the average investor isn’t buying all 500 stocks in the S&P
500—he’s only picking a few stocks to own. That makes it hard for him to mimic
the overall performance of the market.
And on top of that, he’s also not picking the right stocks. I recently read a paper that found only 4% of
stocks have been accounting for 100% of the gains of the stock market over the
past 100 years. So to beat the market, you need to be one heck of a stock
picker!
Now, I don’t know how each individual investor picks stocks… But
I’d guess many buy shares in companies they’ve heard about in the news. The
problem is: The media don’t talk about companies until they’ve already gone up
quite a bit.
Take a look at the FAANG stocks—Facebook, Amazon, Apple, Netflix,
and Google. They get a lot of attention because they’re huge companies that
have created incredible products or services. And individual investors pile
into these popular companies…
But they’re always late to the game. They rarely buy at the bottom
or sell at the top.
Nick: Study after study proves that individual investors can’t
beat the market on their own. Yet some of Wall Street’s best minds consistently
do…
For example, Jim Simons of Renaissance Technologies had a fund
that averaged nearly 72% returns over a 20-year period… Stanley Druckenmiller
returned about 30% while running his fund in the 1980s and ’90s… And Warren
Buffett averaged 21% returns during a 40-year period.
So what’s their secret?
Jason: I worked on Wall Street for years, and
these guys watch the markets all day—it’s their job. They know as much as they
possibly can about stocks. And they get information quicker—and act sooner—than
ordinary investors.
On top of that, Wall Street guys have systems that tell them when
to get in and out of positions. They know exactly what prices they’re buying
and selling at.
And these systems work…
For example, my proprietary system scans nearly 5,500 U.S. stocks
every day, looking for the best of the best that big institutions are buying
up. These types of stocks can rise by double or triple digits in just a few
weeks or months.
My system pulls more than 120 data points for each stock—including
basics like volume, price, and fundamentals, along with more complex data. On
average, it flags about 300 stocks per week that institutions are likely
buying.
And I rank them from highest to lowest based on my proprietary
algorithm. Then, I highlight the stocks with the highest probability of future
price appreciation. Those are the ones I add to my Palm Beach
Trader portfolio
.And my system has proven to be powerful: Since January 1, 2019,
my portfolio is up over 22%. The S&P 500 is up only around 14% in the same
time.
So it is possible to beat
the market. You just have to have the right system and stock picker.
—
|
Nick: Do you have any advice for do-it-yourself stock pickers?
Jason: If you’re rich and well-connected, you
could invest in a hedge fund. They traditionally outperform the market.
However, expect to pay a 2% fee just for the privilege of letting them manage
your money. And if they turn a profit for you, they’ll keep 20% of it, too.
But if you’re not rich and well-connected, you could just park
your money in a low-cost index fund and forget about it.
The good thing about index funds is that they’re worry-free. On
the negative side, though, you’ll pay fees and won’t ever beat the market…
There are periods when markets fall, while some great stocks keep
going up. And if you’re in an index fund, you’ll miss out on that
outperformance.
So for those wanting to put in a little work, find a trusted stock
picker. Look for a guru you like, and stick with him.
—
|
Nick: Before we wrap up, what’s your stance on the markets right
now?
Jason: I’m cautious in the very near term. My
proprietary ratio is showing that the market is close to being overbought—it’s
due for a breather.
That’s why last week, I recommended my subscribers take profits on
a few stocks. We closed out Match Group and Etsy for gains of 33% and 54%,
respectively, in nine months.
We also sold half of our position in The Trade Desk, which is up
over 100% within our nine-month sweet spot. Now, we’re just playing with house
money on that trade.
I do think that any dip in the market right now will be
short-lived. But I’ll also say this: Because we’re so far along in this
economic cycle, I think the stock market is about to become narrower.
In a bull market, the rising tide lifts all ships. But in a
selective bull market—like the one we’re heading into—you have to identify the
best companies.
So it’s even more important to have a great stock picker on your
side now. Active investors will be rewarded going forward.
Nick: Thanks for your time, Jason. And congrats on the big
winners.
Jason: No problem.
Nick’s Note: For 16 years, Jason worked with some of
the top firms on Wall Street, placing trades for the richest institutions in
the world.
He used that experience to create a $250,00 database that flags
when big money is flowing into certain stocks, pushing them higher and higher.
The system has shown historical gains of 209%, 382%, and 262%—along with 114
additional winners.
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