Picking the right stocks is not always the hardest part of investing...
Getting the timing correct can be even more difficult.
On Monday, I gave you my formula for finding winning stocks... I told you to look for companies with multiple years of positive revenue growth, a high return on assets, a healthy balance sheet, a reasonable valuation, and dividend payments that increase every year. Stocks like these tend to compound at a high rate year after year.
But even the highest-quality companies have drawdowns...
Take iconic beverage maker Coca-Cola (KO), for example. It has returned 10.8% a year over the past 16 years. That makes it one of the best stocks for long-term investors.
Still, some moments were better than others to get into Coca-Cola. The stock experienced many drawdowns of 10% or more along the way that would've offered you a better entry price...
If you knew when the best time was to buy a compounder like Coca-Cola – and when you should avoid adding it to your portfolio – you could maximize your gains.
That's exactly what my new StockTracker system is designed to do.
You see, a stock's performance is not just about cash flow, earnings, and management decisions... It's also about the broader sector a company is part of.
Financial research has shown that 28% of a stock's return can be attributed to its sector. In other words, if you invest in a company that's in a hot sector with strong tailwinds, you could boost your returns by nearly one-third.
That would make a huge difference across a lifetime of compounding wealth.
I want you to think of the market like this...
The gray line is the stock market – let's say it's the S&P 500 Index. The green line is any given stock or sector.
Over the long term, the green line keeps up with the market. But along the way, it fluctuates. That means there are better and worse times to buy into that asset.
A big reason for the fluctuation is investor sentiment. Investors move in a herd... repeatedly overreacting to changing news and opinions.
To give you an example of what I mean, let's say the green line represents the industrial sector, whose performance is tied to economic activity. Over time, investors go through a roller coaster of emotions on the economy...
When factory orders are rising and business is booming, industrial stocks beat the market. But euphoric investors take it too far and bid industrial companies up to unreasonable valuations.
Then, as soon as there's a bad earnings release or economic report, investors look at their overvalued industrial holdings and decide they got ahead of themselves. So they start selling those stocks en masse – either out of fear or to book profits.
At the same time, these investors realize they missed some other sector that's now outperforming, and they start piling into that instead. And then the process repeats.
This rotation can be subtle. It doesn't have to lead to a full-blown sector recession.
Still, the pattern is clear... The herd follows each other around and around, making one sector or another too expensive and then too cheap in an endless cycle.
And although the real data isn't as clean as our cartoon-style drawing above, you can still see it in charts. Case in point: Here's the S&P 500 and the industrial sector over the past six years...
You can see there are times when industrials lagged the market. Then they'd pop up above the market... before eventually dropping below it again.
You can also see this rotation by comparing the performance of industrial stocks to the S&P 500. A rising line means industrials are outperforming the market. A falling line means they're lagging it. The rotation is clear as day...
These sorts of swings aren't revolutionary. After all, that's how markets work.
But... if you could get a handle on how these rotations happen and predict them in advance... you could make a lot of money.
All you'd have to do is buy sectors when they're at a low... and sell (or ignore) sectors when they're at a high.
No matter what's happening in the economy, there are always sectors poised to outperform or lag the market. You just need to know which is which.
That's where my new StockTracker system comes in.
It lets you type in 5,000-plus stocks, funds, and sectors and gives you an overview of where each asset is in its cycle.
This morning, I went public with all the details in a video presentation. I talked about how my system uses satellite-tracking technology to predict stock moves, how you can use it to earn outsized gains, and what I see coming for the rest of the year. (Spoiler: I believe a $26 trillion shock could turn the market upside down.)
Whether you buy and hold stocks for the long term or actively trade them, my system can help you outperform.
To catch a replay of my recent presentation, click here.
What We're Reading...
- From earlier this week... Doc's Formula for Buying Winning Stocks.
- Something different: A new housing law targets affordability – here's what that means for homebuyers and sellers.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
July 15, 2026