Van’s Note: Van Bryan here, Jeff Brown’s longtime managing editor.
Today, we’re bringing you a special edition of The Bleeding Edge from the newest addition to the Brownstone team, Jason Bodner.
Regular readers might recall my interview series with Jason from a few weeks ago. There, we talked about how he got his start on Wall Street, and how a major discovery allowed him to leave it behind as he charted his own path. (Catch up on that series here, here, and here.)
Now he uses this discovery to find the best stocks in the market for his subscribers.
And today, he’s turning us on to an investment trend that could offer tech stock-like returns in a surprising corner of the market. Read on to find out…
All I ever wanted was to win at stocks. And I thought it would be easy…
For 20 years, I was on the front lines of Wall Street, doing everything from running equity derivatives desks to consulting for hedge funds.
But during most of those years, I frustratingly missed the big picture when it comes to investing…
Back then, I focused on chasing the news headlines and always trying to stay one step ahead of everyone else. I would wake up at 5 a.m. each day checking emails for news and staring at the Bloomberg terminal, waiting for the feed to start pouring in. Then I’d start scouring the market for opportunities that matched up.
It was exhausting. I couldn’t possibly keep up with that rat race – no one could. But I wanted to add value to my clients’ portfolios: the biggest hedge funds, pension funds, and investors on the planet. And in those early years, that was how I thought I could do it.
Of course, it was a fool’s errand. I was constantly one step behind. I thought I knew what was going on in a stock, only to watch the ones I focused on go nowhere… while others soared to unimaginable heights.
Maybe you feel that frustration too, sometimes. With the way that news moves nowadays – and how stocks seem to react at random – you may feel like a perennial spectator, but never a player.
All along the way, I knew there had to be a better method to reading the market. An edge that would take me from spectator to player – and allow me to share that method with the world.
Eventually it happened…
It took one major light-bulb moment, tons of research, money, and about 30,000 hours of dedication… but I finally cracked the code of the stock market.
Hidden right under my nose all along, it was blindingly simple – just follow the “Big Money”…
When I say Big Money, I’m referring to investment entities that control trillions of dollars. They have virtually endless resources – both human and financial. They have an edge that regular investors like you and me could never hope to exploit.
The key was to find when Big Money is buying the best quality stocks. So, I built a system to do it for me. And that helps us find what I call outliers: the best of the best stocks that go on to return multiples of your money over time.
Since I’ve followed my system, I’ve been able to hand my subscribers peak potential returns as high as 1,000%-plus, with our average open return as high as 121% – all with an average holding period of just nine months.
Safe to say, this system changed the way I invest. Waking up at absurd hours to watch news headlines is a thing of the past.
Now, all I have to do is consult my system – which identifies the best stocks in the market, and shows whether or not the Big Money is buying them. Then I recommend that my readers buy those stocks, and we just sit back and let the Big Money work its magic.
Now, here’s why I’m telling you all this…
Right now, the Big Money’s favorite arena for years – the tech sector – is facing some heat. At writing, the Nasdaq 100 is down nearly 3% from its highs this week, and down almost 10% from its high of the year.
Will the recent downside in tech end its reign as supreme sector-leader? I don’t think so.
I think this is a temporary repositioning of investors chasing returns in the battered “reopening” sectors as COVID-19 vaccines roll out. Eventually tech will regain its superior footing with the best sales, earnings, and profits in the market.
Right now, Big Money may not be a big buyer of tech, but don’t be fooled! Investment managers don’t get paid if they don’t invest – they have to buy stocks!
So the question is: what are they buying?
In today’s issue, I’ll answer that question. And I’ll show you how to get exposure to this unassuming sector that’s captured the Big Money’s attention…
Markets are like magic shows. The magician wants you looking elsewhere while they quietly work the illusion out of view.
The same kind of misdirection is happening right now. You see, Big Money is still buying tech – just in stealth mode.
Just like the movie The Hunt For Red October, the submarine relied on stealthy, crafty maneuvers to get to its ultimate goal. Big Money is doing the same thing.
When I think of tech companies, I think of software, 5G, semiconductors, and microchips… the kind of stuff you read about all the time from Jeff here in The Bleeding Edge. And this is precisely the kind of stuff that’s taken a hit in recent weeks.
Yet despite tech’s recent stumble, the Big Money hasn’t really stopped buying. It’s just doing a magic trick – a misdirection. Big Money hasn’t shifted its focus from tech companies. It’s just quietly going into something I call “stealth tech.”
These are companies that, at face value, don’t seem like tech companies at all. But they heavily utilize technology in their businesses. And right now, Big Money is gobbling up the best “stealth tech” play in the market: financial stocks.
My system spits out Big Money buy signals, which tell me when Big Money is most likely getting involved in a specific stock. And it says that 20% of all Big Money buy signals over the past month were in financials.
And each week, from those buy signals, I use my system to isolate the top 20 potential outliers of tomorrow. These stocks are where I’ve found the best returns for my subscribers. And over the last month, a shocking 50% of those have been financial stocks.
At this point, you might be scratching your head. How can boring financial stocks attract this much Big Money attention? And how are they “stealth tech” companies?
Here’s the big secret: a lot of these “boring old financial companies” are really tech companies in disguise.
I’ve seen major buying in financial exchanges, e-commerce (one of which we just added to Outlier Investor), online mortgage companies, digital payments companies, and online brokers.
These stocks sound financial, but they have a huge tech component. Each business model listed there needs gobs of technology: networking, data analysis, messaging, cloud architecture, and the list goes on and on.
That’s why, as traditional tech companies have fallen, Big Money has turned its attention to these “stealth tech” plays.
So even though the market magicians want you to think they’re selling tech to buy financials, they’re just buying tech after all… only it’s harder for you to see.
Now, I told you that Big Money isn’t buying traditional tech companies at the moment. As a result, we may see ugly price action for a few weeks. But in my view, that’s just building a base to launch off of when earnings season comes to town in mid-April.
But if you want to get exposure to some of these “stealth tech” financial stocks, you might consider an ETF to do so.
Again, the market is currently volatile, and growth stocks are feeling pressure. That means you should use caution when entering positions and have a longer-term time frame for success.
But these types of stocks can be found in the ARK Fintech Innovation ETF (ARKF). It holds stocks like the ones I mentioned today: exchanges, e-commerce, and payments stocks. It’s pulled back quite a bit recently, so it offers a good entry here.
If you want more specific exposure to blockchain and digital payments – a core tech component of lots of great finance plays – consider the ETFMG Prime Mobile Payments ETF (IPAY). It’s also on sale right now.
But looking at the multiyear charts for both of these monsters shows why they will likely resume their upward trajectory in short order.
Following Big Money allowed me to unlock the key of where the big gains really come from. I’m no longer a spectator, I get to play the game on my own terms – and now, you can too.
And while it may look like Big Money is selling tech and buying financials, it’s really buying “stealth-tech” in preparation for the next big rally in the not-so-tech sectors.
Tech is the future of everything. There’s no question about it. In my view, it will continue to be a market leader in the years to come, whether it’s stamped as a tech stock or as a financials stock.
Even though tech stocks may be taking a much-needed rest, knowing where Big Money investors are placing their chips can help us come out the other side looking like the magicians on the stage… not the spectators.
Patience and Process,
Jason Bodner
Editor, Outlier Investor
P.S. Like I mentioned, I just recommended a new “stealth tech” stock to readers of my investment advisory, Outlier Investor.
This advisory uses my Big Money system to identify the best-quality growth stocks in the market and pinpoint the ones that the Big Money is piling into. These two factors make for explosive gains over the long haul, and they’ve handed my readers chances to multiply their money several times over, multiple times.
To learn more about how my system works, and why I created it, just click here to watch a presentation I put together with your editor, Jeff Brown. There, we reveal what makes this system tick. And we’ll even give away five stocks showing Big Money interest for free.
Like what you’re reading? Send your thoughts to feedback@brownstoneresearch.com.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
