Why you don’t need a bull market to make great returns … the expanding role of AI in investing … unflattering statistics for retail investors … how Prometheus helps – in just 2 minutes
Can you make great returns in an awful market environment?
The most obvious example comes from last year. As you can see below, while the S&P fell 19% in 2022, if you’d invested in the SPDR Energy Select ETF, you’d have made 64% on your money.
And if you’d concentrated your energy bet in a single stock such as Occidental, you would have more than doubled your money.
Yesterday’s Digest was skeptical about the idea that we’re beginning a new, multi-year bull market today. But don’t confuse that with the belief there won’t be loads of opportunities for enormous profits in the next several years – even if we do enter a tough broad market environment.
Yes, I’m concerned for a buy-and-hold investor who puts money into an index fund today. But where does it say you need to be a buy-and-hold investor? And clearly, you have vastly greater investment choices than a broad market index.
The handsome energy returns in 2022 despite tough market conditions illustrate a point we make frequently at InvestorPlace…
It’s not so much a “stock market” as it is a “market of stocks.”
In other words, the market is not one huge monolith that rises and falls in unison. It’s made up of thousands of different stocks that perform well and poorly at different times, for different reasons, and in different market environments.
So, no matter how challenging the conditions are for the broad indexes, there’s always a bull market somewhere, ready to be traded higher.
Of course, finding these “mini bull markets” takes time. You must do your homework. And that’s where the average investor runs into trouble…
How much time per day, on average, does your typical retail investor allocate to personal financial management?
Take a moment to get your answer.
It’s 0.03 hours per days…or less than two minutes.
In 2018, the Bureau of Labor Statistics surveyed Americans about how they spend their time, and “strategizing their investments” was not at the top of this list.
After “sleeping,” and “working,” “watching TV” came in as the most time-intensive activity for survey respondents. That clocked in at 2.84 hours per day.
Now, to be clear, investing is a zero-sum game. For you to make money, someone else must lose money – or at least suffer an opportunity cost of having sold you a winning stock before it raced higher. And yet, on average, we spend less than two minutes a day researching our investments.
Imagine your brother-in-law came to you, swearing he had a home-run startup business idea that just needed a bit of venture capital funding.
After his best sales pitch – of less than two minutes – would you give him, say, $5,000, no questions asked?
While that might sound absurd, that’s similar to what the average investor does in the stock market.
This wouldn’t necessarily be a problem if the stock market was filled with nothing but average retail investors
If everyone was putting in less than two minutes per day on research, we’d all be similarly handicapped so it wouldn’t matter. Of course, that’s not the case.
For decades, deep-pocketed professional money managers have hired armies of researchers, quantitative analysts, and behavioral scientists to outsmart their competition. And it’s worked.
You’ve likely seen the long-term average returns of guys like Warren Buffett. From 1965 through 2021, shares of Buffett’s Berkshire generated a compound annual return of 20.1% – basically doubling the 10.5% for the S&P 500.
And the average investor? Well, the timeframe below is slightly different, but you’ll get the point.
Between 1996 and 2015, the average investor enjoyed a whopping 2.1% return (in orange below – dead last).
Now, just when you thought this was bad, it gets worse.
Today, you’re no longer battling guys like Warren Buffett. What’s on the other side of your stock market gamble now is a cutting-edge artificial intelligence bot that is faster, smarter, and free from emotions that drive bad investing decisions.
Are you ready to put your 2 minutes of stock market research up against a cutting-edge AI program?
For years now, computers have been growing more prevalent in the world of investing. Back in 2021, in the U.S. stock market, roughly 70%-80% of overall trading volume was generated by algorithms.
Since then, these “algos” have only grown in use, while becoming smarter.
How do you feel about your odds against them?
Artificial intelligence is a game changer for the stock market.
When Wall Street statisticians realized they could apply AI to many aspects of finance, including investment trading applications, Anthony Antenucci, vice president of global business development at Startek, had insight to share.
“They could effectively crunch millions upon millions of data points in real time and capture information that current statistical models couldn’t,” he told ITPro Today. “Machine learning is evolving at an even quicker pace and financial institutions are one of the first adaptors.”
Of course, Antenucci isn’t the only one to recognize AI’s stock potential. Online trading is expected to reach a market value of approximately $12 billion by 2028. Much of this anticipated growth will be thanks to AI.
While humans remain a big part of the trading equation, AI plays an increasingly significant role.
But there’s a silver lining…
This explosion of AI hyperintelligence is no longer the exclusive domain of professional money managers. It’s now available to you and me. And in the “every stock for itself” market environment we’re entering, this AI intelligence has never been more welcomed.
Last week, our hypergrowth expert Luke Lango debuted “Prometheus,” an AI-powered trading system designed and trained to target stocks returning 100%+ before they begin to rally
Let’s go to Luke for more background about what went into this project:
Back in 2022, the executives here at InvestorPlace knew that we were unequivocally entering the Age of AI. They knew that those who acted proactively and figured out how to use AI to their advantage would dominate entire industries…
…While those that didn’t would likely find themselves broke in just a few short years.
So, InvestorPlace tasked my team of programmers, quant researchers, and traders to covertly develop a trading system that put the power of AI into the hands of our subscribers.
This has been my primary focus – and obsession – for the past year.
Luke’s obsession is now a reality. All you do is enter a stock’s ticker, then it provides you a numerical value – the higher the value, the more likely the stock is to enjoy a price breakout over the coming several weeks.
For example, here’s Prometheus with its score for Nvidia:
Let’s put Prometheus to work in real-time
We’ll circle back in a handful of weeks to compare scores with returns.
As I write Tuesday morning, Yahoo! Finance reports that the five most actively traded stocks today are NIO, Tesla, Amazon, Apple, and AMD.
If we’re screening these stocks through Prometheus’ price-breakout lens, what’s each stock’s likelihood of a price pop over the next several weeks?
Here are the Prometheus rankings as we stand today:
NIO – 49
Tesla – 95
Amazon – 77
Apple – 68
AMD – 58
One of these stands out head-and-shoulders above the others. If you’re looking to generate short-term trading profits, which one are you going to choose?
By the way, guess how long it took me to get this information…
Less than two minutes! Hooray – our TV-time is saved!
Circling back to the top of today’s Digest, the broad market may or may not run into headwinds over the next year. But even if it does, so what?
When you approach the market as a trader who’s focusing on short/medium-term price strength, you basically sidestep the macro factors that weigh on the broad market. They’re of far less relevance.
What matters instead are the micro-factors that are driving the price of a breakout stock higher. And that’s where a cutting-edge AI program can offer immense value.
To watch Luke give a free demonstration of Prometheus and better understand the trading approach that underpins its engineering, click here to see a replay of last week’s live event.
Here’s Luke to take us out:
Have you ever wondered why some investors do better than others? It’s as if the best investors have a sixth sense about the markets. They don’t – they’ve simply spent more time improving their stock-picking abilities.
That’s what Prometheus did in a short amount of time.
And in our most recent model run, Prometheus delivered results that have to be seen to be believed.
You may be skeptical, and I would not blame you… There is a lot of hype in the financial world. But Prometheus is different. It’s backed by real results, and it’s ready to help you make a portfolio that can beat the market.
Have a good evening,