Editor’s note: Not everyone will find long-term success in investing…
So with that in mind, let’s look back today to a classic message from Chaikin Analytics founder Marc Chaikin. This essay first appeared in the Chaikin PowerFeed in February 2022.
In the essay, Marc details one simple tool that professional investors use to be successful over the long run. This idea gives the pros a critical edge over amateur investors.
And one more programming note before we get to the essay…
Our Chaikin Analytics offices will be closed this Thursday and Friday for Thanksgiving. So we won’t publish the daily PowerFeed e-letter either day. Our normal publishing schedule will resume on Monday, November 27. We hope you all enjoy the long weekend.
Now, let’s get to Marc’s message…
Investing isn’t easy. Don’t let anyone tell you otherwise.
Having access to the most powerful analytical tools available helps – a lot. Great investing requires great data and evidence-based analysis. But there’s something more basic underneath that, too…
It determines, right from the outset, whether an investor will find long-term success in the markets. And it’s frustratingly simple…
I’m talking about having a process.
Seriously, every successful investor has a process. None of these big shots just shoot from the hip.
Sure, on TV, these high-profile investors might come across as cavalier. But don’t let that fool you… They all have a process. Having a repeatable process is simply the way to be successful on Wall Street.
I know, I know… this might sound painfully obvious. Or it might sound like a Yogi Berra truism. But I can’t count the number of times I’ve talked to individual investors who have little to no process. It’s shocking, really.
Think about it…
Most everyday investors have goals. And some even have a general workflow. Despite that, most of the folks I’ve come across just kind of “poke around for opportunities.”
The truth about great investing is that it’s tedious…
In fact, it’s so tedious that most mom-and-pop investors simply can’t keep up with it. I don’t blame them. It’s a monumental task.
Be honest…
Do you have a defined exit strategy for every stock you own? Is it written down? And is it more than just saying, “I’ll take gains when it feels right”?
Even after you decide all of that, you need to deal with a flood of information for every stock in your portfolio. The world doesn’t stop when you buy a stock.
What about earnings reports? Do you take those into account? How about insider activity or expert analyst ratings?
We’ve just scratched the surface. And I bet it already feels overwhelming.
Even if your investing strategy is technical in nature (meaning it’s based on the price action of the stock instead of business fundamentals), you’re still confronted with mountains of information.
Unless you love spreadsheets, it’s probably too much. And most mom-and-pop investors end up making compromises. They rationalize “gut feeling” decision making.
That might work occasionally. But it’s not a path to consistent success. Again, the foundation of reliable success on Wall Street is having a process…
This is why I developed the Power Gauge system.
As regular PowerFeed readers know, the Power Gauge crunches data on 20 individual factors. And it puts out clear and actionable recommendations based on those factors.
In other words… the Power Gauge has a process built into it.
Imagine that a friend turns you on to a small-cap stock. It’s getting almost no attention from analysts. But the story he tells you about it sounds great…
You want to invest. And you’re about to click “buy.” But then, you notice the company’s next earnings report is just a week or two away.
If you’re like me, just thinking about taking a big hit on an earnings play makes your stomach turn. Your friend made the stock sound like a great opportunity. But you don’t want to lose your shirt.
So… what’s your process? How do you evaluate a situation like this?
Our Power Gauge system makes sure you have industry-leading quantitative tools at your side. You can enter the ticker and get an instant reading. This rating takes the company’s earnings trend into account and will put you ahead of the crowd when making decisions.
You don’t have to use the Power Gauge to succeed in investing. But I know where many individual investors suffer…
The issue isn’t finding great ideas. Instead, the problem is having a process for owning them – and for knowing what to do as things change.
The Power Gauge solves that problem. But even if this tool isn’t for you, make sure you have a process when investing.
Understand why you’re buying. And know what to do if things change. Have a plan for when you’ll sell and stick to it.
If you can do those things, you’ll be a much more successful long-term investor.
Good investing,
Marc Chaikin
