Editor’s note: The stock market is wrapping up its worst year since the financial crisis…
And most investors aren’t sure what to expect as we head into 2023.
During uncertain times like these, it’s important to take a step back and reflect on your investing approach. And that’s exactly what we’ll do in the Chaikin PowerFeed this week…
Over the next four days, we’ll give readers a “peek behind the curtain” of our approach.
We’ll start today with a trip back to the late 1960s…
That’s when Chaikin Analytics founder Marc Chaikin began his long, successful career on Wall Street. And importantly, it’s when the Power Gauge’s foundation was set.
This essay first appeared in the PowerFeed on January 24. But as you’ll see, it’s a timeless piece of advice that will serve us well as the new year begins…
Folks, when I started on Wall Street, we hadn’t yet landed on the moon…
That was a long time ago. And I’ve learned a lot during my decadeslong career.
But the most important lesson I ever learned happened early on. And with stocks on the verge of their worst year since 2008, it’s critical to keep this idea in mind today.
Let me explain…
I joined Shearson, Hammill in 1966. At the Wall Street firm, I learned the ropes as a broker.
I wasn’t an analyst yet. But I spent as much time as I could with those folks.
And as an up-and-comer with a mind for finance, the stock market was the most interesting thing in the world to me. I wanted to understand everything about how it worked.
More importantly, I wanted to know how to use it to make money. And frankly, I picked the right time to get into the business with that as my goal…
I earned my license on October 7, 1966 – the exact day the bear market ended. And for the first two and a half years of my career, it felt like every day was an “up day.”
Life was good back then. I was 23 years old, bringing on new clients, and generating great returns for them as a broker. It felt like I had life – and the markets – all figured out.
Everything went great until early 1969…
That’s when the first bear market of my career reared its ugly head. It lasted nearly two years. The benchmark S&P 500 Index plunged roughly 35% over that span.
It was brutal. Instead of every day being an “up day”… they were almost all “down days.”
As tough as that time was, though, it quickly taught me the most pivotal lesson of my career…
I wouldn’t survive in this business without “something else.”
I just wasn’t sure what “something else” was yet.
You see, until then, I had focused on “fundamental analysis.” It’s what everyone used.
Analysts and brokers spent their days diving into the ins and outs of companies. We came up with estimations of future business prospects and earnings. Then, we decided if a company was cheap or expensive compared with those future prospects.
It all made sense to me at first. And as I said, it worked extremely well for the first couple of years. It was a bull market, after all.
But when that bear market hit, I realized I wouldn’t be able to protect my clients, stay sane, or even go to sleep at night without that “something else.” I needed to find something to supplement my firm’s fundamental research…
This awakening began my lifelong journey toward creating the Power Gauge. From that point forward, I focused on analyzing the best data I could get my hands on.
In the following years, I built proprietary models using that data. Those models led to a darn fruitful career on Wall Street. And ultimately, in the wake of the last financial crisis, I left retirement with the mission of sharing my quantitative work with “mom and pop” investors.
Simply put, at the start of my career, I learned the most valuable lesson of all…
You don’t want to go it alone in the markets. That was true in 1969, and it’s still true today.
Good investing,
Marc Chaikin
Editor’s note: With the Power Gauge’s help, Marc has found nine of the 10 best-performing stocks each year for the past seven years. And now, for the first time ever, he’s revealing exactly where you should move your money before the new year begins…
Until midnight tonight, you can claim instant access to his top 10 best stocks for 2023… his 10 “ticking time bomb” stocks you need to avoid or sell immediately… and a bundle of bonuses designed to help you succeed in the new year. Click here for the full details.
