| Editor's note: Last week, we introduced you to Marc Chaikin, the founder of our newest sister company, Chaikin Analytics. In 2011, he created the Power Gauge system for finding the best opportunities in stocks, and it has become one of the best ways for individual investors to level the playing field. In today's essay, Marc will explain how the Power Gauge flashed a "buy" signal on video-game retailer GameStop (GME) last August, months before the Reddit crowd took notice... and he'll highlight a little-known stock that his Power Gauge system rates as "very bullish" at today's prices.
The Untold Side of the GameStop Story By Marc Chaikin, founder, Chaikin Analytics  I developed my proprietary 'Chaikin Money Flow' indicator way back in 1982...
And to be honest, I'm still amazed that it works so well nearly 40 years later. Obviously, I believed that it would work. But what I mean is... I didn't realize the tool would soon become such a major "stock analysis cheat code." You see, the Chaikin Money Flow works so well that it's used by hedge funds and billionaire investors. It's even built into the Bloomberg Terminal these days... And Bloomberg's biggest competitor (Thomson Reuters) uses the indicator, too. This tool, along with others I developed over the years, led me through a very fruitful, decades-long career on Wall Street... And by 1999, I was ready to retire. Believe me... retirement was great. But in the fallout of the 2008 financial crisis, I couldn't ignore what took place... I had spent years developing quantitative tools for Wall Street. I had helped many of the big shots with their analysis tools... but I hadn't done much of anything for individual investors. That's why I decided to level the playing field... I launched Chaikin Analytics in 2011. And over the past decade, I've taken everything I learned from my years on Wall Street... and bundled it into a package of tools for individual investors. I don't mean to sound grandiose... but it's truly the culmination of my life's work. Today, I want to continue my introduction to Empire Financial Daily readers... In short, I'd like to share some of my thoughts on the "Power Gauge" system, give some examples, and detail how this one-of-a-kind system can help you unlock incredible investment opportunities. In many ways, the Power Gauge is like sitting in 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... 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 with its money. And it works better than you might imagine... 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 that persistency matters... You don't open a position of 23 million shares overnight, after all. That's how many Coca-Cola shares legendary 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 what was at the time a ho-hum stock 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... Here's how I uncovered an opportunity in GameStop (GME) before the folks on Reddit... 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 system... 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 had 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 methods. 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...
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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. The Power Gauge 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. It's how I know at a glance that Boise Cascade (BCC) is in an incredibly bullish position... As you can see, using this powerful tool doesn't have to be complicated... It's designed to provide individual investors with actionable and concise information in a matter of seconds. You probably haven't thought of Boise Cascade before. In truth, I haven't, either. But it's near the top of the Power Gauge's "Best of the Small Caps" list right now. And in no time at all, I can gather an incredibly detailed picture of this company's performance. That's the beauty of the Power Gauge. 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. And I've bundled decades of market research into the Power Gauge... Today, it works better than I ever dreamed. It's like having a "stock analysis cheat code"... sitting in on a private board meeting... or however else you want to describe it. Put simply, it's designed to give individual investors the best quantitative analysis available. And I'd like to give you the opportunity to add this set of tools to your arsenal... That's why I've put together a special presentation where I cover the Power Gauge in more detail and explain how the Power Gauge can find winning investments again and again. Watch it before it goes offline for good by clicking here. In the mailbag, readers weigh in on the new market influencers, a comment on Internet creators and employment, and a couple of nice reader compliments... Did any readers get involved with GameStop over the past few months? If so, were you able to book any gains? Let us know by sending an e-mail to feedback@empirefinancialresearch.com. "Hi Berna, I wouldn't put Satoshi on the same T-Shirt as the three other snake-oil salesmen... the three disgust me in terms of avarice, ego, and self-aggrandizement. Of the three, Wood is the least vile. "As the Bard wrote: 'Fling away ambition, by that sin the angels fell'... 'Ambition' being the lust to appear godlike." – S. Berna comment: I love a good Shakespeare quote! Well-invoked here, I believe! "Musk should spend more time on his cars, batteries, and rockets and less time running his big mouth. He singlehandedly decimated holders of crypto. He abuses his power in the same way as Trump, and in my view, should be 'deplatformed.' (Course he'd probably just buy another company like Twitter or build his own.) This is what happens when you have too much power concentrated in the hands of one person." – M.S. "Berna, I don't thing Seth R. Is correct about that [that online creators explain the drop in the employment ranks]. "Arguing that TikTok and YouTube creatives are masking the payroll data is like arguing that gig workers and eBay (EBAY) sellers are masquerading the payroll data. "YouTube typically pays between $3 and $7 for every 1,000 views, depending on whether a creator video is watched to completion, not to mention all kinds of other methods that YouTube will employ to shave the returns to these people, the same way Uber (UBER), GigWalk and eBay shave off money from their creators. "I doubt the effect is as pronounced as Seth implies." – O.P. "Following your advice has made me several thousand dollars. Yes, there have been some dogs and missed signals but all in all you guys (and gals) are the best." – Ted S. "Hi Berna, Whitney, Enrique, I was happily surprised to see my letter published! "As a follow up, despite your comments (and excellent advice) about the market still having some "legs," I sold my iShares NASDAQ 100 Index ETF (XQQ) at $105.00 ($CDN). I purchased at $78.00 last year around this time. The stock over the past few months showed resistance at $105.00. I am happy that I made what I made and decided to cash out and take profits as XQQ was the largest portion in my small portfolio. I feel that sometimes don't be too greedy and sleep better. "I enjoy your excellent advice and stay safe!" – Jeff S. Berna comment: Jeff, there's never any shame in taking profits. Locking in profits is one way to manage risk. And a 35% one-year return is excellent. Regards, Marc Chaikin
with Berna Barshay
May 26, 2021 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply sign up here. |
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