The Untold Side of the GameStop Story
The success of the 'stock analysis cheat code'... Like sitting in a private board meeting... The untold side of the GameStop story... This system beat the Reddit crowd... A current 'very bullish' reading in a small-cap stock... Try out the 'Power Gauge' right now...
Editor's note: When it comes to family, many of us will do whatever we can to help...
For Marc Chaikin, the founder of our newest corporate affiliate Chaikin Analytics, that meant coming out of retirement... His wife, Sandy, needed a better investing solution after the 2008 financial crisis, and Marc knew he had the ability and knowledge to make a difference.
His one-of-a-kind "Power Gauge" system for finding the best opportunities in stocks was born in 2011. Now, it's one of the best ways for individual investors to level the playing field. As Marc said yesterday, "Every day, it helps investors make winning decisions."
In today's Digest, Marc will dive deeper into the beauty and simplicity of the Power Gauge...
He'll detail the "buy" signal it flashed for video-game retailer GameStop (GME) last August, months before the Reddit crowd took notice... He'll highlight a little-known stock that currently receives a "very bullish" rating from the Power Gauge... And best of all, he'll show you exactly how you can claim free, instant access to the system for the next several days.
Take it away, Marc...
I (Marc Chaikin) developed my proprietary 'Chaikin Money Flow' indicator way back in 1982...
And to be honest, I'm still amazed that it works as well as it does nearly 40 years later.
Obviously, I believed that it would work. But what I mean is... I didn't realize the tool would soon become such a major "stock analysis cheat code."
You see, the Chaikin Money Flow works so well that it's used by hedge funds and billionaire investors. As I mentioned yesterday, it's even built into the Bloomberg Terminal these days... And Bloomberg's biggest competitor (Thomson Reuters) uses the indicator, too.
This tool, along with others I developed over the years, led me through a very fruitful, decadeslong career on Wall Street... And by 1999, as I said yesterday, I was ready to retire.
Believe me... retirement was great.
But in the fallout of the 2008 financial crisis, I couldn't ignore what took place...
I had spent years developing quantitative tools for Wall Street. I had helped many of the big shots with their analysis tools... but I hadn't done much of anything for individual investors.
That's why, as I noted yesterday, I decided to level the playing field...
I launched Chaikin Analytics in 2011. And over the past decade, I've taken everything I learned over my years on Wall Street... and bundled it into a package of tools for individual investors. I don't mean to sound grandiose... but it's truly the culmination of my life's work.
In today's Digest, I want to continue my introduction to Stansberry Research readers...
In short, I'd like to share some of my thoughts on the "Power Gauge" system, give some examples, and detail how this one-of-a-kind system can help you unlock incredible investment opportunities.
In many ways, the Power Gauge is like sitting in a private board meeting...
Information leaks... The "smart money" buys ahead of major announcements... And analysts at the biggest investment banks have unprecedented access to what's happening.
This is just how the world works. There's no getting around it.
Now, don't get me wrong... I'm not saying the "insiders club" is structured how it should be. But it's the system we have.
The U.S. Securities and Exchange Commission has done a lot to clean things up over the years... But in reality, the investing world remains far from perfect.
That's why I focused my early efforts on the Chaikin Money Flow... It focuses on what I call "accumulation."
The concept of accumulation is simple to understand... We want to know what the "smart money" is doing with its money. And it works better than you might imagine...
Knowing what hedge funds and billionaires are doing with their money is like sitting in on private board meetings. This was made incredibly clear to me around 1989...
At the time, soft-drink maker Coca-Cola (KO) wasn't a popular stock...
The company had released "New Coke" in 1985. As you might remember, the wackos in management tinkered with Coke's formula... And they basically force-fed it to consumers.
But of course... the public didn't really want New Coke.
The whole thing bombed. Within three months, Coca-Cola went back to its original formula. It has gone on to become one of modern history's most famous marketing disasters.
Well, in the late 1980s, I noticed something odd in my analysis... Coke was accumulating money behind it. And importantly, the accumulation was persistent.
I learned early on, persistency matters... You don't open a position of 23 million shares overnight, after all.
That's how many Coca-Cola shares legendary Warren Buffett bought when he established a position with his holding company Berkshire Hathaway (BRK-B). And by simply using the tools I had developed in my career, I spotted that persistent accumulation.
It was an amazing feeling... I had uncovered Buffett's massive position before it became public just by watching as a ho-hum stock at the time accumulated cash behind it.
Coca-Cola went on to become one of the best-performing stocks of the next decade... It returned around 27% per year over that span, roughly doubling the overall market.
Now, more than three decades later, I've built that strategy into a robust set of tools for individual investors to spot similar opportunities. And it works better than ever...
Here's how I uncovered an opportunity in GameStop (GME) before the folks on Reddit...
By now, everyone knows the incredible story of the video-game retailer...
In short, a very persuasive analyst pitched a failing stock to a group of interested folks on Internet message board Reddit. The failing stock, GameStop, was highly shorted by a bunch of Wall Street's biggest names. And in turn, a "short squeeze" of epic proportions ensued.
That's the prevailing narrative at least. While it's not wrong... it's not entirely right either.
You see, using the Power Gauge, we were able to spot an opportunity to profit in GameStop before the Reddit crowd piled in. Again, it's simply a matter of following the Power Gauge.
Take a look at the following screenshot of GameStop's metrics. It comes from our system...
Now, I know there's a lot going on here. We're looking at a lot of information.
Start by turning your attention to the green, yellow, and red bar all the way at the bottom of the image... That's the weekly version of the Power Gauge rating.
You'll notice that the Power Gauge rated GameStop as "bullish" (green) starting at the end of August 2020 and through early October. That's because, among other reasons, the company had strong and persistent Chaikin Money Flow performance around that time. You can see that in the above chart, too... It's the gauge with red and green peaks and valleys.
This was the "buy" signal... And it happened months before GameStop would announce a much-needed board shakeup in early January of this year.
The fact is... Keith Gill, the now-famous analyst on the "WallStreetBets" Reddit forum, wasn't alone in seeing the deep value in GameStop. As the Chaikin Money Flow indicator shows, big shots on Wall Street had gotten in, too.
So, sure, there was smart money on the short side of this trade... That's well-documented. But there was also a lot of smart money moving into a bullish position with this stock... And it was happening long before GameStop became a retail media sensation.
The Power Gauge captured that accumulation in late August... And it turned bullish.
After its initial bullish recommendation, the Power Gauge turned "neutral" (yellow) in early October. Don't let this fool you, though... This is the system's way of saying, "We're in, let's wait and see what happens."
If you would've bought GameStop shares in August when the Power Gauge turned bullish and held on until it ultimately turned "bearish" (red) in February... you could've walked away with a return of roughly 800% – even after the stock dropped from its late-January high.
That's absolutely remarkable.
And if you had managed to get out around the top, you would've done even better... You could've turned every $1,000 invested into roughly $63,000 in a matter of months.
Obviously, GameStop's short squeeze was an exceptional moment. It's an extreme example that doesn't happen all the time. But as you can see, the results are undeniable...
The Power Gauge noticed something was going on. And it turned bullish long before the Reddit crowd came rushing in. You could've capitalized using our innovative system.
It all comes down to knowing what Wall Street is doing...
Look, I'm not a blind follower of technicals... I believe that, at the end of the day, fundamentals are the driving force behind long-term market performance.
But the simple reality is... as individuals, we don't have the power to do the kind of fundamental analysis required to outperform Wall Street. It's an insiders club.
The insiders will always have the best knowledge. As I said, we can't get around that.
Fortunately, we can use a variety of tools to level the playing field. And looking at the Chaikin Money Flow – what the smart money is doing – is just one of these factors.
The Power Gauge looks at 20 factors... And many of them reveal insider secrets.
I've made it my mission... the culmination of my life's work... to level the playing field for individual investors. And that's exactly what I'm doing with the Power Gauge...
I've bundled everything I know into the Power Gauge system...
And these days, I'm finally able to offer it directly to individual investors.
The Power Gauge takes advantage of the most important indicators in the market... And it condenses them into a simple and actionable report.
The Power Gauge analyzes more than 4,000 stocks every day. And each of those stocks is ranked against the company's respective industry, index, valuation, and more.
Then, a full Power Gauge report details the most important factors driving the rating of each stock. And before you decide whether or not to pull the trigger on buying a specific stock, you can run down the "Pre-Trade Research Checklist" that the Power Gauge includes.
It's how I know at a glance that Boise Cascade (BCC) is in an incredibly bullish position...
As you can see, using this powerful tool doesn't have to be complicated... It's designed to provide individual investors with actionable and concise information in a matter of seconds.
You probably haven't thought of Boise Cascade before. In truth, I haven't either.
But it's near the top of the Power Gauge's "Best of the Small Caps" list right now. And in no time at all, I can gather an incredibly detailed picture of this company's performance.
That's the beauty of the Power Gauge.
I'd like you to have the Power Gauge at your side...
The capstone of my career has become leveling the playing field for individual investors. And I've bundled decades of market research into the Power Gauge...
Today, it works better than I ever dreamed. It's like having a "stock analysis cheat code"... sitting in on a private board meeting... or however else you want to describe it.
Most simply, it's designed to give individual investors the best quantitative analysis available. And I'd like to give you the opportunity to add this set of tools to your arsenal...
That's why I've put together a special event that will cover the Power Gauge in more detail. During the event, I'll share how the Power Gauge can repeatably find winning investments.
I'm also offering the chance for all participants to "test drive" a basic version of the Power Gauge leading up to the event. This is my offer to share my insider's perspective with you.
The event is absolutely FREE to attend... It's next Tuesday night, May 25, at 8 p.m. Eastern time. To start accessing the Power Gauge immediately, reserve your spot right here.
New 52-week highs (as of 5/20/21): American Financial (AFG), American Homes 4 Rent (AMH), Bristol-Myers Squibb (BMY), CBRE Group (CBRE), Centene (CNC), CTS (CTS), Expeditors International of Washington (EXPD), Hershey (HSY), Intuit (INTU), Invitation Homes (INVH), IQVIA (IQV), Markel (MKL), Motorola Solutions (MSI), Nestle (NSRGY), Novo Nordisk (NVO), Invesco S&P 500 BuyWrite Fund (PBP), TFI International (TFII), and Health Care Select Sector SPDR Fund (XLV).
A quiet mailbag today, though we've heard from a few folks who say they haven't been able to sign up for the free event on Tuesday through the links we've sent so far. If that was the case for you, please try again right here (or use one of the other links in today's Digest). As always, if you have any questions or comments – praise, rage, or otherwise – send them to feedback@stansberryresearch.com.
Good investing,
Marc Chaikin
Roxbury, Connecticut
May 21, 2021