It’s Time to Make Money… With Other People’s Money

Wall Street lives off “OPM”…

That’s short for “other people’s money.”

You might’ve heard this term before in relation to real estate… It’s a common strategy with “fix and flip” houses. By using OPM through a loan or other means to buy a property instead of an all-cash scenario, the real estate buyer can increase his return on investment.

But as I’ll explain in today’s essay, real estate isn’t the only place you can use OPM to make money. In fact, an incredible opportunity is setting up in another corner of the markets that could enable you to do just that right now…

In short, while real estate investing is great for capitalizing on OPM… Wall Street banks are the true masters of taking other people’s money and putting it to work.

They take in deposits… and then lend out a portion of the deposited money to someone else. And they charge that other person a fee for the service. It’s a similar setup on the investment-banking side, too.

Heck, the whole idea of investing with OPM is baked into the name “investment bank.”

Until the 1980s, almost all very profitable Wall Street firms – the ones that specialized in putting OPM to work – were still private partnerships… You couldn’t buy into them.

That’s no longer the case…

Nowadays, virtually all these companies are public and trade on U.S. stock exchanges. In other words, you can own a piece of the businesses that make money with OPM.

And right now is a great time to buy into this space, according to our Chaikin Analytics “Power Gauge” system… It’s flashing very promising ratings on many of these companies today.

You see, the Power Gauge is a proprietary 20-factor quantitative model… And it scrutinizes the same types of factors that the world’s top analysts do when they’re researching a stock.

It factors in things like “free cash flow” – something legendary investor Warren Buffett loves… and “analyst rating trend” – because who else but Wall Street is better equipped to know where a stock is headed?

Even better, the Power Gauge picks apart “insider activity.” After all, insiders like the CEO, chief technology officer, and chief operating officer know just about everything there is to know about the companies they run… That’s why the Power Gauge also factors in insider buying and selling.

Today, the Power Gauge is “very bullish” on many Wall Street investment companies. The easiest way to see that is by looking at the SPDR S&P Capital Markets Fund (KCE)…

Capital Markets is a fancy way of saying “companies on Wall Street that use OPM to make money.” And KCE’s more than 60 current holdings excel at doing just that…

The exchange-traded fund’s holdings include companies like Charles Schwab (SCHW), a leading broker-dealer and asset manager… and Franklin Resources (BEN), formerly known as Franklin Templeton Investments.

It’s also a “one click” way to buy several publicly traded private-equity companies – like KKR (KKR). KKR made its name in the 1980s and 1990s for a series of successful leveraged buyouts. (The company’s exploits were made famous in the book and subsequent movie, Barbarians at the Gate… It’s a Wall Street classic that you should check out sometime.)

The Power Gauge is very optimistic on those three names and many more today. You can see the system’s current breakdown of the SPDR S&P Capital Markets Fund right here…

As you can see from the three “very bullish” ratings down the right side of the above graphic, the Power Gauge is extremely high on Capital Markets opportunities right now.

But you might be wondering why KCE is only “neutral+” overall at the moment – instead of “very bullish” like the individual ratings. That’s a valid question with a simple answer…

In short, as the markets sold off in recent days due to heightened COVID-19 fears, KCE wasn’t spared. The fund has dropped about 6% from its November 3 high – including around 4% in the past week alone. After such a quick trend change, the Power Gauge put up a caution sign.

But we’ve since learned that these latest COVID-19 fears could be overblown. So with that said, we believe this opportunity is still worth considering today…

If you want to get in on the game and invest alongside Wall Street, think about jumping into the Capital Markets arena and buying KCE. It’s a great way to make money with OPM.

Good investing,

Carlton Neel

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