As Wall Street's Top Analysts Feel the "FOMO" Squeeze, Here's Where to Make Money Next
When we talk about "FOMO" — the acronym for the "fear of missing out" — we're really talking about emotion-driven investing. We're talking about investors "chasing" stocks that are already hot… that are already off to the races.
And we're usually talking about individual investors.
Usually… but not always.
Wall Street analysts are now falling prey to FOMO.
Analysts make their bones on their predictions — for company earnings, corporate share prices, and even targets for market indices like the Dow Jones, S&P 500, and the Nasdaq Composite.
So they look great when their predictions come true. But they look tepid or risk-averse when those targets for a stock get leapfrogged. Once that happens, these sell-siders are forced to play "catch-up" — to "chase" stocks or the market. It's a true "fear of missing out" — so they have to create new price targets.
On the surface, Tesla is just making electric vehicles.
But Tesla could be transforming into much more than that — it could be transforming into an A.I. leader that gives Nvidia a run for its money as one of the potentially best A.I. stocks to own.
Elon Musk just said that "Tesla is clearly at the cutting edge of A.I. development," and he's putting his money where his mouth is — Musk is building a supercomputer that could cost $1 billion to develop over the next year.
What's the immediate impact of this news for you?
Well, we have our own advanced A.I. at our fingertips... and it can provide price predictions for TSLA... giving you a potential edge over everyone else still trying to make sense of this news.
The rope-burning speed that saw the S&P 500 transition from bear to bull market on June 8 caught those investment-bank sell-siders by surprise.
Their targets have been leapfrogged — and the "FOMO" pressure is spooling up.
They seem out of touch with the markets.
They're "leaving money on the table."
They're getting calls from angry clients.
And, rest assured, they're being pilloried by their bosses.
We're now watching as analysts race to (in the jargon of Wall Street) "upwardly revise" their forecasts, with the S&P 500 already surpassing previous projections for the entire year.
On July 20, the S&P 500 was higher than 22 out of the 23 year-end projections made in January that Bloomberg tracked.
In a new round of revisions, one of the most bullish projection changes in terms of percentage came from the Switzerland-based global financial services firm Credit Suisse, hiking its 4,050 end-of-year S&P 500 target by 16% to 4,700.
Research provider Fundstrat already had a bullish outlook for the S&P 500 with a year-end target of 4,750. But even those folks felt an upgraded target was warranted. Fundstrat's new end-of-year target for the S&P 500 is 4,825.
It's not a bad thing to have extra confirmation of bullish outlooks, but there's a bigger lesson here.
No matter what is going on, there are always bullish opportunities to make money… and you have an edge if you know where they are while everyone else is waiting on the sidelines for "confirmation" that now is the right time to invest.
We're here to give you that edge.
Because we didn't have to wait for investment bankers to get bullish in the middle of 2023.
We knew where to look for moneymaking opportunities way before that.
Always a Market for Making Money
Unlike other "financial research" firms — which copy-and-paste headlines as a substitute for real advice — the TradeSmith team provides actionable insights.
Opportunities based on quantitative analytics.
Opportunities that pay off… that put real money in your pocket.
In a September 2022 Special-Situation Central report, I discussed the arbitrage opportunity between Microsoft Corp. (MSFT) acquiring Activision Blizzard Inc. (ATVI). At the time, Activision Blizzard was trading for $76 per share.
With the deal nearing the finish line, ATVI is trading for $92.55 — a 21% return.
No, it's NOT ChatGPT... (It's not Microsoft, Google, NVIDIA, or any of the other big players you've likely heard about either!) It's a tiny sub-$5 stock!
In our August 2022 Special-Situation Central feature, I outlined the investable clues of why the World Wrestling Entertainment Inc. (WWE) was wearing a "buyout bullseye." On the day of that report, the stock opened at $72.81 per share. On April 3 of this year, the WWE and the parent company of the UFC — Endeavor Group Holdings Inc. (EDR) — announced a merger.
Today, the stock price is trading for $106.42, a 46% jump.
And in our September 2022 Buy This, Not That, TradeSmith Daily feature, I highlighted On Semiconductor Corp. (ON) as a "Buy This" stock when it was trading for $66.10.
Trading for $97.69 as of this writing, ON is up 47%.
I'm sharing this not to boast, but because it demonstrates our data-based, action-first, stay-ahead-of-the-crowd mindset.
We don't succumb to FOMO like most investors because we act first — and let others chase us.
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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