Editor's note: We're continuing yesterday's essay from Marc Chaikin, founder of our corporate affiliate Chaikin Analytics. In this piece, recently published in the Stansberry Digest, Marc demonstrates the power of taking an industry-focused investment approach – and shows how it can help you gain an edge in the markets...
Yesterday, I shared the power of moving beyond the "big picture" in stocks... and focusing on industries.
The most successful big wealth managers look at the market this way. They track the performance of groups like energy, materials, industrials, utilities, health care, financials, consumer discretionary, consumer staples, information technology, communications services, and real estate.
Our Power Gauge tool at Chaikin Analytics tracks all these specialized industries. 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.
It also proves the power of this investing approach. 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 shows 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 shift 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 would have decided to get out of your position.
Importantly, you would've done that just before the stock crashed as much as 80%. Take a look...
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.
You can see the power of investing based on industry. That's why this functionality is such a crucial part of my Power Gauge system...
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.
Editor's note: Tonight, Marc is releasing a new "inflation resistant" recommendation for his subscribers. It's a "best of the best" stock from one of the most bullish industries in the market right now... And Marc's systems indicate the biggest gains are straight ahead. Learn more here while you can.
The "smart money" is always one step ahead. So in his quest to level the playing field for individual investors, Marc created an incredible system to help folks keep up with the pros... Learn more here: The Four Main 'Ingredients' to My Life's Work.
"Don't risk exposing yourself to flames when an alarm sounds," Marc Gerstein says. Your best performers could plummet in a matter of days. That's why it's critical to have the best tools at your disposal to determine your next move... Read more here: This 'Too-Easy' COVID-19 Trade Plunged 52%.
Buying stocks is easy. There are thousands of theories out there on why and when to buy. But buying is only the first half of the equation when it comes to making money...
THE SUPPLY CRUNCH WEIGHS ON THIS CHIP GIANT'S SHARES
Today's stock is struggling as volatility grips the market...
With the ongoing crisis in Ukraine and COVID-19 lockdowns in China, many industries are facing extreme uncertainty today. Even as the world economy reopens, countless businesses are still suffering from supply-chain issues brought on by these challenges. The semiconductor industry is a clear example...
Taiwan Semiconductor Manufacturing (TSM) is a $470 billion giant in the semiconductor business. It manufactures most of its chips in Taiwan. Demand for chips has continued to surge... But with all the delays along the supply line since 2020, it has been hard for companies to fill orders. TSM has faced longer delivery times from its tool suppliers, among other setbacks. The company is still growing, though... In its most recent quarter, revenue increased 36% year over year, hitting $17.6 billion (and handily beating Wall Street estimates).
Despite the company's strong performance, shares are still down around 25% over the past year... And they recently fell to a new 52-week low. As uncertainty runs rampant, this stock has taken a hit for now...