If you’ve been anxious about the market recently, you’re not alone.
With the free collapse of stocks in 2022, individual investors have become increasingly vulnerable. In fact, according to the American Association of Individual Investors ’weekly sentiment survey, the number of bulls on Wall Street has dropped to their lowest since the financial crisis in 2008.
Now, it’s pretty obvious why all the bulls disappeared. A war is going on in Europe. Inflation is running at high levels. The US Federal Reserve has already begun its aggressive quantitative tightening cycle. And China’s deal in another round of Covid-19 lockdown.
Not to mention, oil prices are rising to levels commonly seen data a recession. In fact, the bond market’s big recessionary warning signal-the 10-2 yield curve inversion-flashed a few weeks ago.
Obviously, in the face of these economic and political conflicts, it’s time to sell stocks and run for the hills. right?
small.
Have you ever heard the saying, be greedy when others are afraid? Well, that saying has never been more true than it is today.
While others were panicking, my team and I met a once-in-a-decade stock market phenomenon that’s what’s evolving now. And it only appears at times like this, when everyone is worried because of a crash.
In fact, this phenomenon is the most bullish historical market indicators.
This will lead you to buy Microsoft (NASDAQ:MSFT) at 40 cents in 1988 or Amazon (NASDAQ:AMZN) for $ 6 in 2001. You could have taken it Nvidia (NASDAQ:NVDA) at 40 cents in 2002. Each of those investments turned out to be an average $ 10,000 stake in million-dollar pay days.
So far, my team and I have witnessed this phenomenon appear for the first time since 2008. So, while others may be running for the hills, we are running towards stocks that show the phenomenon that ito. History says we will have the opportunity to make millions into thousands …
But if we act now.
So, what about this phenomenon? Lets find out.
The “Divergence” Phenomenon That Repeatedly Makes Millionaires
We have already discussed this extraordinary market phenomenon in these issues before, so we will be brief in our description this time.
In other words, we call this trend “divergence. ” It centers on the large divergences that appear between which a stock ay trade and where it is can be trade. And it only happens about once a decade.
In essence, our analysis suggests that the long -term trajectory of stocks is ultimately determined by the company’s earnings and profits. The relationship is undoubtedly strong over 90%. And that’s almost as powerful as any interaction that gets in the real world.
Occasionally, however, the two trends differ. That is, stock prices fall, while profits and earnings rise. Often, this happens during times of widespread market panic. Investors let emotion analysis – not primary analysis – drive their decision -making.
Whenever this happens, it is followed by a convergence. The stock price returns to the earnings/earnings trend lines.
Usually, the relationship between stocks and earnings is like rubber. Whenever it is elastic, it eventually returns. And those snapbacks tend to make huge profits on the stocks with the biggest difference.
This happened in the late 1980s after Black Monday. Investors who capitalized on the divergence then had the opportunity to make 500% returns over the next five years.
This happened again in the early 2000s with the dot-com crash. That phenomenon has allowed smart investors to get nearly 750% average return over the next five years.
And it happened most recently in the financial crisis of 2008. During that diversification, investors had the opportunity to score 1,000% gains over the next five years.
It’s a once-in-a-decade phenomenon in the stock market with a perfect track record of mining millionaires.
And now it’s emerging again.
The Biggest Divergence Yet?
Obviously, there is a lot of fear out there right now. Like many fears in 1988, 2000 and 2008. And as happened then, this fear creates a divergence.
Across the market, companies are seeing stock prices falling sharply as revenues and profits continue to grow.
Earlier divergences have created great (some would say life changing) buying opportunities. This one will be no different.
In fact, according to our analysis of the data, the divergence we see today is the biggest one yet.
Our proprietary measure of divergence-which we call “divergence magnitude”-calculates the magnitude of a stock’s divergence. And it shows that many stocks are currently in the midst of large historical differences. Now we see some divergence magnitude north of 500%. For context, our historical analysis has never yielded a reading of more than 450%.
Moreover, our analysis also revealed a strong correlation between divergence size and convergence size. That is, the more individual stocks diverge, the greater its subsequent rebound. Think of the similarity of the rubber band. The farther you pull back a rubber band, the faster and more furious it snaps back into equilibrium.
And so far, what we see in stocks is the rubber band stretched to its maximum. The next thing that happens is the largest individual stock rally in the history of the market.
The Final Word
I’m not a comedian, but if possible, I want to end this issue with a joke.
Katok katok!
Who is there?
Chance.
Opportunity who?
tanga ka. Opportunity only knocks once.
And right now, folks, the biggest investment opportunity since 2008 is knocking on your door. And it doesn’t knock twice.
In fact, we are looking to take advantage of it. We are looking for the most diverse stocks in the market to add to our portfolio with our research advisory, Investors in Innovation.
In fact, just yesterday, we released a new “Buy Alert” on one such stock. This is a small, hypergrowth tech stock that we think will be the next big cloud stock. Think of “next Salesforce (NYSE:CRM) ”Or the next Service Today (NYSE:NOW). ”
However, its valuation is currently only part of a fraction of the market caps of those cloud giants.
We really like the long -term potential of this stock. And it currently trades at bargain-basement levels.
Come in while you can.
At the date of publication, Luke Lango does not (whether directly or indirectly) any positions in the securities mentioned in this article.