By Jason Bodner, editor, Palm Beach Trader
“Buy the best stocks—then, pretend you’re dead.”
I recently wrote a report for a close friend who’s also a multibillion-dollar asset manager.
He wanted to know the best way for his clients to make money in stocks over the long term. And that’s what I told him in the report.
So in today’s essay, I’ll show you why this “zombie” trading strategy is one of the most profitable ways for ordinary investors to get rich from the stock market…
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The Zombie Strategy
The premise of the strategy is simple: Buy elite companies and don’t touch them. You’ll likely wake up very rich decades from now.
Michaela Pagel is an assistant professor of finance and economics at Columbia Business School. And her research found that investors following this method generally perform better…
History has shown us that the stock market is a relatively safe bet over the long term because it has typically grown. Investors would be wise to keep this in mind, because those that check their portfolios too often and are driven by the daily or hourly fluctuations in the market may make decisions that have a negative impact on their long-term financial prospects.
And the data is indisputable: Over the last century, the market has continued to climb higher…
But here’s the thing…
A 2017 study by an Arizona State University finance professor found that—over the past 100 years—just 4% of stocks have accounted for nearly all the profits of the market each year.
Now, I call them outliers. These companies are unique in their business, grow sales and earnings at high rates, and have big profit margins.
And if you’re serious about making money, they’re the stocks you want to hold for the long term.
Outliers are where the big money is hiding out. So if you’re not targeting them, you’re basically wasting your time as an investor…
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How to Identify Outliers
Now, if you’ve been following the Daily, then you know I’ve developed a highly accurate stock-picking system after leaving Wall Street—where I was even a partner at Cantor Fitzgerald.
Cantor Fitzgerald helped create Tradeworx, the fastest high-speed trading system on Wall Street—which identified winning trades 30 milliseconds in advance.
But my system has proven to identify the market’s fastest-growing stocks up to 30 days beforehand.
It scans nearly 5,500 stocks every day, looking for the best of the best that institutions are likely buying by the truckload. And I use 80 complex algorithms to score and rank each one of them for strength across 29 factors.
It’s a very powerful system… Since 1990, on average, it’s identified half of the top 5% of names in the S&P 500 each year.
When a stock triggers an unusual institutional (UI) buy signal, my system goes green. And it looks like this…
If you’d bought Nvidia when my system first flagged it in 2000 and held it until today, you’d be up over 1,600%.
And it doesn’t always take decades to make these types of gains, either.
My Palm Beach Trader subscribers are currently sitting on five doubles and two triples in less than a year—including The Trade Desk (up 211%) and Paycom Software (up 120%).
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Patience and Process
I once asked a multibillion-dollar hedge fund manager how he could stand pat, waiting for the right price on a stock he wanted. He simply replied, “Patience and process.”
What he meant is: You don’t need to spend all your time and energy constantly rebalancing your portfolio.
You just need to find the outliers (process) and hold them (patience). Years of data and research back this up.
So if you want to get rich in the stock market, find the best companies that the smart money is likely buying up. Then, pretend you’re dead.
When you awaken, you’ll be sitting on a fortune.