The 'Big Picture' in Stocks Isn't Good Enough

The 'big picture' in stocks isn't good enough... Institutional-level investors see the market differently... Keeping track of more than 30 things at once... Using data to find the 'best of the best' and avoid the 'worst of the worst'... How to take advantage today... Join me in less than two hours...

Editor's note: Today, we're sharing the final part of the special investing series from our corporate affiliate Chaikin Analytics. We hope you've learned a lot over the past week...

Last Friday, Chaikin Analytics CEO Carlton Neel covered the importance of a repeatable investment process. Then, on Monday, Carlton detailed why it's critical to "know which way the wind is blowing."

Chaikin Analytics founder Marc Chaikin noted yesterday that the "investing road map" isn't as clear as it was just a few months ago. Instead, according to Marc, a "rolling crash" is upon us.

And today, Marc will discuss how you can find out where the rolling crash is headed next...

Many investors began worrying about a crash earlier this year...

And Russia's invasion of Ukraine in late February amplified those fears.

The S&P 500 Index lost as much as 13% from the beginning of 2022 through early March. That put the benchmark index in "correction" territory for the first time since the early days of the COVID-19 pandemic.

It makes sense... Folks typically start to panic when the "overall market" falls. They ignore all the tidbits of news along the way. And they don't react until the declines start to make headline news.

In other words, they're looking at what they consider the "big picture" in stocks.

That's how most regular investors and the mainstream media think and talk about the stock market. They'll say that "stocks are up" or "the market is down" as if it's all one big entity.

You'll notice that many folks swing from euphoria to panic depending on whether "the market" has a good or bad day, week, or month. They're wrapped up in their emotions as if it were a sporting event.

But that's simply not the best way to invest. It's not the way most professional investors see the market. And it isn't how I (Marc Chaikin) have seen the market during my 50-year career, either...

Since the day I started at Wall Street brokerage Shearson, Hammill in October 1966, I learned to dismiss this idea of a uniform entity moving either up or down. (My colleague and Chaikin Analytics CEO Carlton Neel touched on this point in Monday's Digest, too.)

Plain and simple, the stock market isn't just one big thing.

It's actually a multitude of different, smaller things...

Things like energy, materials, industrials, utilities, health care, financials, consumer discretionary, consumer staples, information technology, communications services, and real estate.

And you can break them into even smaller groups, too.

The problem is, this makes for too many moving pieces. That's why many regular investors just completely ignore the idea.

Instead, they'll think of "the market" in terms of the S&P 500. And a lot of folks keep track of how the Nasdaq Composite Index is doing so they know what's happening with "tech stocks."

This mindset is also how most folks invest... They just buy stocks. They're more focused on individual-company metrics like earnings reports, growth projections, and stuff like that.

That's actually a big mistake.

You see, investors could set themselves up for greater success if they followed a different approach...

Studies have proven that 50% of a stock's performance can be attributed to its industry.

50%!

That means choosing the right industry is literally half the battle when deciding which stocks to buy and which stocks not to buy. If investors know which industries are doing well and which ones are struggling, they can get a head start on finding the best opportunities.

This mindset directed nearly all of my buying and selling decisions while I was on Wall Street.

Whoever could see the biggest threats and opportunities in the market first – and correctly determine how they would ripple through specific industries – had a huge advantage.

This is how billionaire investor George Soros looked at the market when I worked with him...

He passed it down to the great Stanley Druckenmiller, who also worked with Soros before starting his own hedge fund. Even Bill Gross, the former manager of the biggest bond fund in the world, uses this approach.

Other big-name wealth managers operate this way, too. Citadel and Impala Asset Management were both in the top five best-performing funds of 2021... And they both look at the market this way.

The famed Medallion fund does this as well. And it's one of the most successful hedge funds of all time – if not the most successful. The Medallion fund has reportedly generated average annualized returns of 66% before fees since 1998, delivering nearly seven times better returns than the overall market.

What's Medallion's secret? The fund's managers don't pay attention to specific stock stories.

Instead, they search for elusive patterns across specialized groups that regular investors simply aren't looking for. Medallion is pretty open about this secret to their success.

My point is... this approach is how I learned to invest throughout my five decades in the business. And it's how I manage my own investments to this day.

For the most part, I don't worry much about the overall market. I don't watch every move of the Dow Jones Industrial Average or the S&P 500. I almost exclusively track industries.

But most investors are left in the dark when it comes to this approach. They're simply too focused on the hot stock pick of the day.

Don't get me wrong, I love ranking stocks...

So I took the algorithm for evaluating individual stocks in our Power Gauge system... and applied it to industries.

The Power Gauge tracks all specialized groups I mentioned earlier. It's now possible to see whether entire groups of stocks are "bullish," "neutral," or "bearish" at any time.

In other words, instead of just predicting the performance of a single stock over the next 90 days... we can predict the performance of entire industries over the next 90 days.

We can figure out if it's about to experience a crash... or if it's poised for a big run higher.

I like to think of this functionality as an "Industry Monitor." It's constantly scanning every corner of the stock market – looking for signs of weakness or opportunity.

This Industry Monitor is how we've predicted the path of the "rolling crash" so far.

Let me show you the Industry Monitor in action...

On March 26, 2021, the entire innovative technology industry went "bearish" in the Industry Monitor.

Back then, the mainstream media still revered Cathie Wood and her ARK Innovation Fund (ARKK) as a "breakout star" in the investing world. And some publications were calling her "the market's new oracle."

But if you would've known about the innovative tech industry's "bearish" rating in the Industry Monitor... then you would've known what was about to happen to some of her favorite stocks.

Sure enough, after getting stuck in neutral for months following the Industry Monitor's warning, the entire industry quickly fell around 45% throughout the winter. Take a look...

This example alone proves the Industry Monitor's value. But it gets better...

We can use the Industry Monitor to drill down into the best and worst stocks in each industry.

We know that individual stocks tend to do much better or worse than the industry as a whole. And within the Industry Monitor, we actually rank which stocks are poised to outperform their industry and which stocks are poised to underperform it.

In other words, we know the best of the best stocks in any given industry. And we know the worst of the worst stocks in any industry.

Let's say you're one of the many investors who bought Zoom Video Communications (ZM) after the COVID-19 crash in March 2020.

In the early days of the pandemic, you couldn't go a day without hearing about this company. That made sense... The company was leading the world's pivot to remote work.

Investors saw that. And the company's stock skyrocketed nearly 1,000% in 2020...

But then, let's say you checked the Power Gauge in early 2021. You would've seen that the system issued a "bearish" rating for Zoom. And you decided to get out of your position.

Importantly, you would've done that just before the stock crashed as much as 80%...

Huge relief!

Again, when it comes to the perfect time to sell any stock, the Power Gauge works. But it's even more powerful when you add the Industry Monitor into the mix...

Zoom belongs to the innovative tech industry. And remember, the Industry Monitor would've issued a "bearish" warning for the entire industry in March 2021.

That's a one-two punch of warning signs against Zoom.

Within the Industry Monitor, you can instantly see the worst individual stocks in an industry. That way, you'll immediately know they're the ones you need to sell as soon as possible.

Imagine knowing weeks – and often months – in advance which industries will soon come crashing down. It's a perfect tool for any investor looking to gain an edge in the markets.

Now, I'm bringing this approach to individual investors...

Currently, this functionality is only available as a part of our highest level of software at Chaikin Analytics.

Only 3% of our users have access. A lot of those folks are financial advisers who use our software to help their clients.

But because of the current market conditions, I've decided to make this approach more accessible to individual investors. The reason is simple...

Regular Digest readers know that we're in the midst of what I call a rolling crash. It's a serious market event. And it's going to bring unprecedented challenges to investors.

Simply put, now is not the time to keep this strategy under lock and key. Folks need to be able to easily identify the best-performing industries – and the worst-performing ones, too.

Later this evening, I'll explain exactly how to do that during my special event...

The action is set to begin promptly at 8 p.m. Eastern time. It's absolutely FREE for all Digest readers. Register for your spot right here.

And don't forget... Everyone who attends will hear the names and ticker symbols of a pair of stocks I've found using my Industry Monitor. The first one is a stock that folks should avoid at all costs right now. And the second one could return triple-digit gains this year.

See you in a couple of hours.

New 52-week highs (as of 3/29/22): AbbVie (ABBV), American Financial (AFG), Brown & Brown (BRO), Black Stone Minerals (BSM), Costco Wholesale (COST), Enterprise Products Partners (EPD), Hershey (HSY), Lynas Rare Earths (LYSDY), Invesco High Yield Equity Dividend Achievers Fund (PEY), Pure Storage (PSTG), Royal Gold (RGLD), and Utilities Select Sector SPDR Fund (XLU).

In today's mailbag, one subscriber says, "Bring on the recession." Do you agree or disagree? Let us know and tell us why with an e-mail to feedback@stansberryresearch.com.

"Hello! I'm a subscriber of Stansberry and have been reading a lot about the current market concerns, the inverted yield curve, and the worry of a recession.

"I seem to be the only one thinking this, but I actually welcome a real recession, as I think the U.S. really needs it for many reasons.

"I found this article written in 2007 that I thought might be interesting to others.

"While obviously some items are not applicable now, so many are. In particular, this idea that we all have the right to spend, spend, spend and get, get, get. It would be nice for a wake-up call to get things a little bit more down to reality, as the ones suffering from all this 'economic growth' are not the average person.

"The average person working hard at a job at a grocery store can't even afford a home like I'm guessing they could 30 years ago. Minimum wage may go up a few bucks, but A) other wages don't, and B) a few bucks an hour is not an economic win when a house can surge in price $100,000 over the course of three months.

"This is NOT progress. Bring on the recession; most average people will not suffer any more than they are now in this 'strong economy.'" – Paid-up subscriber Carrie M.

Good investing,

Marc Chaikin
March 30, 2022