Why I Came Out of Retirement to Help Everyday Investors
Editor's note: We welcomed Chaikin Analytics as our corporate affiliate in May. And as we explained to Digest readers at the time, founder Marc Chaikin is a living legend...
[Marc is] widely regarded as a pioneer on Wall Street, and is probably most known for creating the industry-standard "Chaikin Money Flow"... It's a proprietary indicator used by investors and traders all over the world to analyze thousands of stocks and exchange-traded funds.
Through the weekend, we're sharing a special three-part Masters Series from Marc that first appeared in the Digest in late May. In short, we hope it will help you learn everything you need to know about his journey – which started on Wall Street way back in 1966.
Plus, you'll see how Marc's one-of-a-kind "Power Gauge" system for finding the best opportunities in stocks was born in 2011... And you'll learn exactly why he created it.
With that in mind, let's turn things over to Marc for the rest of the story...
Why I Came Out of Retirement to Help Everyday Investors
By Marc Chaikin, founder, Chaikin Analytics
I retired in 1999, hoping to spend the rest of my days relaxing and playing tennis...
After all, I had worked almost nonstop for more than 30 years on Wall Street up to that point. During my career, I developed the now-ubiquitous "Chaikin Money Flow" oscillator.
Now, as a regular investor, you likely hadn't heard that term before just now. And I'm willing to bet that you haven't used the tool in your personal financial research.
But today, the Chaikin Money Flow is built into the world-famous Bloomberg Terminal... And Thomson Reuters, Bloomberg's major competitor, has it on tap as well.
Traders use the Chaikin Money Flow to get a read on the money moving behind the price action of a stock. And fortunately, by the late 1990s, it had become an industry-standard tool.
I had spent my life's work collecting and interpreting financial data to get to that point. It had paid off... And now, I was ready for a life filled with tennis, books, and relaxation.
My wife, Sandy, wasn't ready for retirement, though...
After working for several years as a vice president at beauty-products company L'Oréal, she built her own business in marketing and consulting. And fortunately, her business was still growing in 1999.
Despite my Wall Street successes, we managed our retirement funds separately. And since her business was getting bigger, she didn't have much free time on her hands... She was simply too busy to chase down the best mutual fund of the day.
At the time, it made sense for Sandy to pay an expert to look after her retirement. And so, she made what was a pretty common and reasonable decision back then... She handed the care of her retirement over to a professional who actively managed her account.
Sure, the fees were high... But as the overall market rose throughout the early 2000s, the fees didn't seem that important. Sandy was busy with her business... And her retirement nest egg was growing alongside it.
In short, life was good... I was enjoying my retirement, and our wealth was still growing.
Then, 2008 came along...
"Marc, I'm paying him to ride my account to zero," Sandy said to me one day midway through 2008, referring to her account manager.
As the financial crisis set in, Sandy's 401(k) account was bleeding value almost every day. And at the time, it looked like there was no end in sight...
To make matters worse, her high-fee active manager didn't want to talk to her... The few times she was able to get him on the phone, he was dismissive.
Then, something incredibly ominous happened...
On September 16, 2008, money-market accounts "broke the buck." That's the fancy way of saying that money-market savings accounts were now losing money. I vividly remember the exact words I told Sandy at the time...
This means we're in deep trouble.
I called my friend, Bill Griffeth. He was CNBC's Closing Bell host at the time.
"Marc, what's going on? We're just about to air," Bill asked me. He hadn't heard the news about the money-market accounts yet. It stunned him.
Even worse, Sandy's actively managed account was down much more than the overall market at the time... It was sitting on losses of about 50% at that point, while the broader market was down about 20%.
Sandy's portfolio manager didn't know what to do. And she wanted out – rightfully so.
Let's be honest, though... Unfortunately, Sandy's investing horror story isn't that unique.
Thousands of everyday Americans watched helplessly as their retirement savings were cut in half – or worse – during the Great Recession.
It was awful. And then, many folks made the worst decision they could possibly make...
They got out right at the bottom. Then, they stayed on the sidelines... They wanted to wait to get back in after things had settled down and weren't as volatile. (Of course, this line of thinking really means after stocks have recovered... But most folks don't realize it.)
Sandy was more fortunate in that regard... She had me at her side. And after more than 30 years as a Wall Street insider, I knew what we had to do. As I told her...
You have to stay invested. Stocks won't stay down forever. We need to ride this out.
Sandy understood. But she had also lost all confidence in her portfolio manager. And I don't blame her... The guy still wouldn't give her the time of day.
Still, I knew that just "stepping aside" and waiting for things to settle down was the worst possible move. That's because of how volatility tends to work after a big crash...
When it comes to the broad market, big volatility up follows big volatility down. A quick glance at the benchmark S&P 500 Index's biggest moves makes this clear...
Major rallies have always come after big busts.
So in the end, Sandy fired her portfolio manager and we took things into our own hands... We rolled her retirement into an index fund at Vanguard.
The first priority was making sure she didn't miss the upside in the recovery that was coming... But after that, what was Sandy supposed to do?
It was so painfully obvious...
I had spent my career building quantitative tools for Wall Street. And I was darn proud of the work that I had done in helping many elite investors find success with those tools...
But when it came to my wife – and the thousands of everyday investors who lost large chunks of their wealth, just like her – well, I hadn't done a whole lot for them.
Although I was enjoying my retirement, I knew that I had the ability and knowledge to fix this problem. After all, I had developed the tools used by many Wall Street insiders.
As Sandy searched for a better solution, I promised myself that I would build the best set of quantitative tools for individual investors on the market. So I ended my retirement and got to work...
That's how the "Power Gauge" came to life back in 2011. After exiting retirement that year, I went on to develop this set of quantitative tools specifically for individual investors.
The Power Gauge takes 20 quantitative factors into account. It's a boatload of data. It looks at everything from price performance... to fundamentals... to insider buying trends... to expert consensus.
Collecting and analyzing the data that the Power Gauge uses would take months for most individual investors. And that's assuming you even know what to look for and where to find the data.
But fortunately, the Power Gauge pulls all this data together in a matter of seconds...
With the Power Gauge, you just put in the ticker of the stock you're interested in. It pulls all of the data using our 20 factors almost instantly... and builds a complete report for you.
You can see the readings on each of the 20 factors that the Power Gauge uses. And more importantly, you get a simple overall reading – from "very bearish" to "very bullish" – on the stock.
It couldn't be simpler to use. But that doesn't mean it's anything less than professional level... Today, the Power Gauge rivals the tools used by Wall Street's insiders.
Along the way, Sandy joined me on this project. We focused all of our time and resources on bringing it to life...
We built a beautiful website that's easy to understand. We grew our team. And we built a variety of tools for individual investors seeking to grow their wealth and retirement funds.
Most importantly, I was able to keep my promise to myself... In the end, I came out of retirement and developed the best set of quantitative tools for individual investors on the market.
The Power Gauge is the culmination of my life's work... Simply put, it levels the playing field. Every day, it helps investors make winning decisions in their portfolios.
Next, I want to share some of my personal thoughts about the Power Gauge. After all, it's a huge part of my life – and after reading the rest of this essay, I hope you'll see why...
In many ways, the Power Gauge is like sitting in on 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, the indicator that I told you about at the start of today's essay... 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. And it works better than you might imagine...
As I said, 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 investor 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...
For example, using this system, I uncovered an opportunity in GameStop (GME) before the "WallStreetBets" folks. 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 Power Gauge system, and as you can see, it covers the period from May 2020 to May 2021...
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.
This system 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.
In the end, during this holiday season, 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. I've bundled decades of market research into the Power Gauge. And now, it works better than I ever dreamed... It's like sitting in on a private board meeting.
Most simply, it's designed to give individual investors the best quantitative analysis available. And I hope you'll consider adding this set of tools to your arsenal today.
Good investing,
Marc Chaikin
Editor's note: Over the next two days, Marc will share the details of his one-of-a-kind "Power Gauge" system... and how it can help everyday investors identify some of the best opportunities in the markets right now. But in the meantime, if you want to learn more, you must check out Marc's latest message – including a way to claim one free year of access to this proprietary tool...
His special presentation includes a live-recorded demo of the Power Gauge... along with the name and ticker symbol of exactly which stock to invest in right now (and which one to avoid), absolutely free. See for yourself why CNBC's Jim Cramer once said, "I learned a long time ago not to be on the other side of a Chaikin trade." Click here to get started.

