Professional money managers are stuck fishing in the same shallow waters. Individual investors don’t have to be.
Tom Yeung here with today’s Smart Money.
The Tanners Creek Super Tournament is a notoriously awful bass fishing competition.
The season-ending event is held annually on the Ohio River in late September and has become known as a “grinder tournament” for its challenging conditions and small catches.
In 2024, the co-winner hauled in less than seven pounds of fish during the first day of the event – roughly the weight of a single large bass during peak seasons. At least one major competitor is skipping the event this year due to “scheduling conflicts.”
A 1-pound, 2-ounce catch
Today, many professional AI investors likely feel the same way about the stocks they own.
Since OpenAI launched ChatGPT in 2022, shares of just 10 AI-related companies, including Nvidia Corp. (NVDA), Meta Platforms Inc. (META), and Broadcom Inc. (AVGO), have driven almost two-thirds of the S&P 500’s returns. The average of these 10 now trades for 57 times forward earnings, making future gains far harder to achieve.
We’re now late into the “fishing” season for these megacap AI stocks.
Also, unlike competitive anglers, most institutional investors cannot walk away from this investment “tournament” because their careers depend on continued involvement.
No professional money manager would last long if they refused to put pension fund assets into Nvidia. In fact, these institutional investors have added another $1.3 trillion to these 10 firms in the past 12 months.
But you don’t have to.
This is your investment “superpower.”
Let me explain…
Your “Superpower”: Walking Away
It’s the ability to walk away from a low-potential tournament and find somewhere with far higher prospects.
No one’s stopping you from leaving the Ohio River to catch 200-pound bluefin tuna in Southern California or 1,000-pound black marlin off the Great Barrier Reef (assuming you have the right fishing licenses).
And by the same token, no one’s forcing you to buy shares of Nvidia when 1,000% returns are simply no longer available. There will be no angry stakeholder letters, no call from The Wall Street Journal, no pink slip from the floors above. (After all, no one can fire you as an individual investor.)
Instead, you’re able to buy shares of companies that look unpopular at the time… and then enjoy the enormous upside their low prices present. These are companies like one firm Eric recommended to his paid subscribers just last week.
Shares of this off-price retailer have now fallen 47% since its 2023 IPO and are now worth just $2 billion – a rounding error compared to rival TJX Cos. Inc.’s (TJX) $155 billion market capitalization. That means this company can rise 1,000% and still be worth one-eighth of its larger rival.
That big move down was one of the factors that caused Apogee, Eric’s new quantitative system for finding potential 1,000% winners, to flag it.
With Apogee, Eric has taken his decades of experience and turned it into a computerized, quantitative set of rules to find these hidden “granders.”
He debuted his new system at this morning’s 10X Breakthrough event. During that free broadcast, he also gave away that system’s first five picks.
Eric sends out his appreciation to everyone who joined him this morning. But if you missed that free event or just need to see it again to get those free picks, you can catch our replay of the broadcast here.
Eric himself will be back here tomorrow with his next Smart Money.
In the meantime, in order to help demonstrate Eric’s “secret” to finding 1,000% winners, I want you to imagine taking a deep breath…
When “Playing It Safe” Means Missing Out
Without exhaling, try breathing in again.
That second breath is called breath stacking, a therapy used to help athletes strengthen their lung capacity.
This makes every breath feel like a gasp for air, and it mirrors how institutional investors feel when buying high-priced companies. They know the initial expansion is already over, and that the second one will be far harder than the first.
Yet, these professional investors are often forced to buy high-priced stocks anyway since their customers demand it. Imagine the headlines if a major pension fund failed to own shares of Nvidia or Apple Inc. (AAPL).
And so, these large funds buy stocks that have surged in value, knowing fully that their customers will probably not get rich from this strategy.
Meanwhile, a separate cohort of investors mint fortunes through buying companies that have “breathed out” (i.e., fallen in price) before mounting a recovery. These are independent-minded investors like…
- Warren Buffett in GEICO…
- Phil Fisher with Texas Instruments…
- John Neff buying Ford…
These investors waited on the sidelines for high-quality stocks to fall first. And only after these compannies went “down a lot” did they jump in.
And that’s precisely the playbook Eric has used for decades to identify over three dozen 1,000% winners.
So once again, Eric and I thank you for watching his 10X Breakthrough event this morning.
And if you weren’t there, I urge you to watch a replay of that special free presentation right now. There, you’ll see Eric cover Apogee, his brand-new quantitative system for finding potential 1,000% winners.
After all, there’s no reason to settle for a 1-pound, 2-ounce striped bass when you can sail off and find black marlin “granders” elsewhere.
Until next week,
Thomas Yeung, CFA
Market Analyst, InvestorPlace